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on Economics of Ageing |
| By: | Saporta-Eksten, Itay; Shurtz, Ity; Weisburd, Sarit |
| Abstract: | We study the effects of public pension systems on the retirement timing of older workers and, in turn, the health consequences of delaying retirement by those workers. Causal inference relies on a social security reform in Israel that shifted payments from husbands to their (non-working) wives, thereby substantially reducing the implied tax on the husband's employment while keeping overall household wealth constant. Using administrative social security data, we estimate extensive-margin labor supply elasticities w.r.t. the average net-of-tax rate of about 0.43 for men over 65. Using the reform to instrument for employment, we find that working an additional full year at old age decreases longevity. This mortality effect occurs after age 75 and is driven by workers holding blue-collar jobs. Finally, we evaluate the effect of the reform on earnings. The results imply a small value for an additional year of life, suggesting that workers underestimate the health cost of employment at older ages. |
| Keywords: | health; Labor Supply; Mortality; Social Security; tax reform |
| JEL: | H31 J10 J22 J26 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14769&r=all |
| By: | Marcin Bielecki; Michał Brzoza-Brzezina; Marcin Kolasa |
| Abstract: | We investigate the impact of demographics on the natural rate of interest (NRI) in the euro area, with a particular focus on the role played by economic openness, migrations and pension system design. To this end, we construct a life-cycle model and calibrate it to match the life-cycle profiles from HFCS data. We show that population aging contributes significantly to the decline in the NRI, explaining about two-thirds of its secular decline between 1985 and 2030. Openness to international capital flows has not been important in driving the EA real interest rate so far, but will become a significant factor preventing its further decline in the coming decades, when aging in Europe accelerates relative to the rest of the world. Of two possible pension reforms, only an increase in the retirement age can revert the downward trend on the equilibrium interest rate while a fall in the replacement rate would make its fall even deeper. The demographic pressure on the Eurozone NRI can be alleviated by increased immigration, but only to a small extent and with a substantial lag. |
| Keywords: | population aging, natural interest rate, life-cycle models, pension systems, migrations |
| JEL: | E31 E52 J11 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:sgh:kaewps:2020050&r=all |
| By: | Dorothée CHARLIER (USMB IREGE); Bérangère LEGENDRE (USMB IREGE) |
| Abstract: | Demographic aging affects Western societies and calls for the adaptation of a number of economic structures, such as pension systems. But this trend requires us to take into account the behavioral changes inherent in aging if we are develop sustainably, specifically concerning resource consumption and carbon dioxide emissions in the context of global warming. The aim of this research is to assess the impact of aging on emissions by disentangling the pure effect of behavioral patterns and the effect of home energy efficiency. Showing that a selection bias arises through the choice of home, we isolate the pure effect of the behavior of older people. We use a discrete-continuous model to address potential endogeneity in a residential energy consumption model due to the choice of home energy characteristics. As a key contribution, we provide evidence that age does have a significant but indirect impact on carbon dioxide emissions, through the choice of dwelling. |
| Keywords: | carbon dioxide emissions, aging, empirical analysis, endogeneity |
| JEL: | Q41 J14 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2020.13&r=all |
| By: | Alexander M. Danzer; Lennard Zyska |
| Abstract: | This study identi?es the causal e?ect of pension generosity on women’s fertility behavior. It capitalizes on Brazil’s expansion of the pension system to rural workers, whose pension wealth subsequently more than tripled. Event study, di?erence-in-di?erences and instrumental variable methods show that the pension reform reduces the propensity of childbearing of women in fertile age by 10% in the short-run. Completed fertility declines by 1.3 children within 20 years after the reform, reducing the contribution base of the Pay-As-You-Go pension system in the long-run. The fertility response is strongest at higher birth parities, among older women and among mothers with sons. |
| Keywords: | Pension wealth, Fertility, Old-age security hypothesis, Quasi-experiment, PAYG, Brazil |
| JEL: | J13 I38 H55 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:bav:wpaper:192_danzerzyska&r=all |
| By: | António R. Antunes; Valerio Ercolani |
| Abstract: | During the last three decades in the US, the older part of the population has become significantly richer, in contrast with the younger part, which has not. We show that demographics account for a significant part of this intergenerational wealth gap rise. In particular, we develop a general equilibrium model with an OLG structure which is able to mimic the wealth distribution of the household sector in the late 1980s, conditional on its age structure. Inputting the observed rise of life expectancy and the fall in population growth rate into the model generates an increase in wealth inequality across age groups which is between one third and one half of that actually observed. Furthermore, the demographic factors help explain the change of the wealth concentration conditional on the age structure; for example, they account for more than one third of the rise of the share of the elderly within the top 5% wealthiest households. Finally, consistent with a stronger life-cycle motive and an increase of the capital-labor ratio, the model produces an interest rate fall of 1 percentage point. |
| JEL: | E21 J1 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202009&r=all |
| By: | Manasi Deshpande; Itzik Fadlon; Colin Gray |
| Abstract: | We study how increases in the Social Security full retirement age (FRA) affect benefit claiming and retirement behavior, and specifically the interaction between these two choices. Using Social Security administrative data, we implement complementary research designs of a traditional cohort analysis and a regression-discontinuity design. We find that while increases in the FRA strongly and immediately shift claiming ages, retirement ages exhibit persistent "stickiness" at the old FRA of 65. We use several strategies to explore the likely mechanisms behind the stickiness in retirement, and we find suggestive evidence of a role for employers in individuals' responses to the FRA. |
| JEL: | H31 H55 J26 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27190&r=all |
| By: | Ding, L.; Jones, A.M.; Nie, P. |
| Abstract: | We present a comprehensive analysis of ex ante inequality of opportunity (IOp) in health among Chinese adults aged 60+ and decompose the contributions of different sets of circumstances. Data are drawn from the 2011 and 2015 waves of the China Health and Retirement Longitudinal Study (CHARLS) linked with the 2014 CHARLS Life History Survey. We use a range of blood-based biomarkers, and apply a re-centered influence function (RIF) approach and a Shapley-Shorrocks decomposition to partition the contribution of circumstances across different quantiles of the biomarker distributions. We find that IOp accounts for between 3.75% and 29.57% of total health inequality in old age across the range of biomarkers. Shapley-Shorrocks decompositions show that spatial circumstances such as urban/rural residence and province of residence are the dominant determinants of IOp for most of the biomarkers. Distributional decompositions further reveal that the relative contributions to IOp in health of household socioeconomic status and health and nutrition conditions in childhood increase towards the right tails of the distribution for most of the biomarkers, where the clinical risk is focused. |
| Keywords: | biomarkers; CHARLS; China; inequality of opportunity; Shapley-Shorrocks decomposition; unconditional quantile regressions; |
| JEL: | D63 I12 I14 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:20/10&r=all |
| By: | Harasty, Claire.; Ostermeier, Martin. |
| Abstract: | This paper examines the projected labour force participation trends of older workers to 2030 and discusses the future of economic dependency for developing, emerging and developed countries. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995078791102676&r=all |
| By: | Grevenbrock, Nils; Groneck, Max; Ludwig, Alexander; Zimper, Alexander |
| Abstract: | This paper investigates the roles psychological biases play in deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cog- nitive weakness increase and relative optimism decrease with age. We document that direct measures of cognitive weakness and optimism share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of subjective survival beliefs. Our main finding is that cognitive weakness rather than op- timism is an increasingly important contributor to the well-documented overestimation of survival chances in old age. |
| Keywords: | Cognition; Con rmatory Bias; Optimism; Pessimism; Probability Weighting Function; Subjective Survival Beliefs |
| JEL: | D83 D91 I10 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14539&r=all |
| By: | Colvin, Christopher L.; McLaughlin, Eoin |
| Abstract: | Using the Irish experience of the Spanish flu, we demonstrate that pandemic mortality statistics are sensitive to the demographic composition of a country. We build a new demographic database for Ireland's 32 counties with vital statistics on births, ageing, migration and deaths. We then show how age-at-death statistics in 1918 and 1919 should be reinterpreted in light of these data. Our new estimates suggest the very young were most impacted by the flu. New studies of the economic impact of Influenza-18 must better control for demographic factors if they are to yield useful policy-relevant results. Covid-19 mortality statistics must go through a similar procedure so policymakers can better target their public health interventions. |
| Keywords: | demographic economics,pandemics,age-adjusted mortality,Spanish flu,Ireland |
| JEL: | N34 I18 Q54 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:srercw:srercwp20202&r=all |
| By: | Palacios, Robert (World Bank); Robalino, David A. (World Bank) |
| Abstract: | Given the prevalence of informal labor, most countries have combined contributory social insurance programs (pensions, unemployment benefits, and health insurance), with non-contributory insurance programs and several types of "safety nets." All of these programs involve different types of subsidies and taxes, sometimes implicit. Because of design problems and the lack of coordination/integration between programs, these subsidies/taxes tend to cause four problems: 1) they can reduce incentives to contribute to mandatory insurance programs and to create formal jobs; 2) they can be regressive since redistribution often benefits middle/high income workers more than low income workers 3) they do not provide continuous protection as workers change occupations and constrain rather than facilitate, labor mobility; and 4) coverage tends to exclude many informal sector workers in the middle of the income distribution. As such, existing programs are not well prepared to deal with a world of labor characterized by persistent low productivity jobs, more frequent labor market transitions including across sectors and geographic regions and higher equilibrium unemployment rates for some groups of workers. This paper develops a policy framework to integrate, in a transparent way, the insurance function (actuarially-fair risk pooling or savings) and the redistributive function (transfers) of the social protection system in order to expand coverage, improve equity, and reduce labor market distortions. We illustrate this type of integration with the case of old-age pensions which is typically the most important intervention, at least from a fiscal perspective. |
| Keywords: | social insurance, social assistance, universal basic income, jobs, pensions, future of work, COVID-19 |
| JEL: | H24 J26 J46 J65 J32 I13 H53 H55 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13258&r=all |
| By: | Juan C. Palomino (University of Oxford); Gustavo A. Marrero (Universidad de la Laguna); Brian Nolan (University of Oxford); Juan G. Rodriguez (Universidad Complutense de Madrid) |
| Abstract: | This paper estimates the contribution of intergenerational transfers (inheritances and gifts) and socioeconomic background to wealth inequality in four OECD countries: France, Spain, Great Britain and the United States. We generate a non-parametric counterfactual distribution where all differences in wealth associated with the intergenerational transfers received and the socioeconomic background have been removed. Despite the diversity of the four countries analysed, we find similar patterns in the results. The combined contribution of intergenerational transfers and socioeconomic background to wealth inequality is sizeable in all four countries studied, ranging from 37% in Great Britain to 48% in the US. When interactions between the two factors are controlled for, the net contribution of inheritances and gifts is between 23% and 30%, while the net contribution of family background lies between 4\% and 11\%. These values are substantial and reveal that the importance of intergenerational transfers in all these countries is at least twice that of socioeconomic background. |
| Keywords: | Wealth; Inheritances; Inequality; France; Spain; Great Britain; United States. |
| JEL: | D31 D63 I24 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2020-537&r=all |