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on Economics of Ageing |
| By: | Fu, Mingqi (Wuhan University); Guo, Jing (Peking University); Chen, Xi (Yale University); Han, Boxun (Wuhan University); Ahmed, Farooq (University of Washington); Shahid, Muhammad (University of International Business and Economics Beijing); Zhang, Qilin (Wuhan University) |
| Abstract: | With 1582 respondents from the Health and Retirement Survey (HRS), this study investigates the heterogeneity in older adults' vulnerability and examines the relationship between vulnerability types, aging attitudes and emotional responses. International Positive and Negative Affect Schedule Short-form (I-PANAS-SF) and Attitudes toward own aging (ATOT) were used to assess the emotional experiences and aging attitudes, and 14 types of pandemic-related deprivations evaluated individuals' vulnerability. Latent class analysis was used to explore the vulnerability types, and weighted linear regressions examined the relationship between vulnerability, aging attitudes and emotional responses. Results showed that the proportion for individuals with mild vulnerability (MV), health care use vulnerability (HV), and dual vulnerability in health care use and finances (DVs) was 67%, 22%, and 11%, respectively. Older adults aged below 65, Hispanics and non-Hispanic Blacks, and those not eligible for Medicaid were more likely to have HV or DVS. The relationship between vulnerability and positive emotions was insignificant, yet individuals with HV (beta=0.10, SE=0.16) or DVs (beta=0.09, SE=0.28) were likely to have more negative emotions than their mildly vulnerable counterparts. Furthermore, aging attitudes moderated the relationship between vulnerability and emotions. Encouraging positive aging attitudes might be helpful for older adults to have better emotional well-being, especially for those with DVs. |
| Keywords: | vulnerability, aging attitudes, emotion, older adults, COVID-19 |
| JEL: | J14 D91 I14 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15092&r= |
| By: | Laura D. Quinby; Matthew S. Rutledge; Gal Wettstein |
| Abstract: | Working longer helps people secure a comfortable retirement, particularly given the rise in Social Security’s full retirement age. Before the COVID-19 crisis, many older workers had internalized this message, and both retirement and Social Security claiming ages were steadily rising. The question is the extent to which the pandemic interrupted this trend. To provide a benchmark for answering this question, this brief (based on a recent study) uses the Current Population Survey (CPS) to compare patterns of leaving work and of retiring before and after the pandemic for individuals ages 55 and over.This comparison, which uses the panel nature of the monthly CPS to follow people over time, allows for identifying the factors that made older workers susceptible to job separations during the pandemic; determining whether those who left employment also retired; and reconciling these patterns with recent trends in Social Security claiming. The discussion proceeds as follows. The first section details the data and methods of the analysis. The second section shows that the pandemic did indeed result in many job exits among older workers – particularly those with less than a college degree, women, Asian-Americans, and those in occupations that did not lend themselves to remote work. The final section concludes that while the pandemic pushed many older adults out of work, it had little impact on retirement and Social Security claiming, which suggests that many might want to return to work if the pandemic continues to recede. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-20&r= |
| By: | Gal Wettstein; Laura D. Quinby |
| Abstract: | Working longer is a key to securing a comfortable retirement. However, disabilities can push older workers out of the labor force before their intended retirement date. Until 2010, the trend of rising disability-free life expectancy in the United States suggested increasing capacity for longer working lives, but recent developments may have stalled this progress. This brief, based on a new study, examines trends in: 1) mortality; 2) institutionalization (e.g., incarceration); and 3) work-limiting disabilities. Using data for 2000-2018, it then determines how long individuals can expect to keep working, and how these expectations vary by race and education. The discussion proceeds as follows. The first section provides the background, and the second describes the data and methodology for the analysis. The third section estimates working life expectancy at age 50 by gender. The fourth section repeats the calculations by race and education. The fifth section presents simulations showing the probability that individuals can continue to work to 67 or 70. The final section concludes that the trends suggest cause for concern. While working life expectancy has improved among the more highly educated, lower-educated individuals � with the exception of Black women � have experienced stagnation. This pattern suggests that calls for older workers to delay retirement, which have proved successful over the past couple of decades, may be less fruitful going forward. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-12&r= |
| By: | Isaac Ehrlich; Yong Yin |
| Abstract: | We pursue a cross-country comparison of relative financial readiness of older households in Japan and the Republic of Korea relative to the US. Our comparative analysis, using macro-level and harmonized longitudinal household financial data, covers the principal financial channels of old age support: public and private pension plans, family support, and self-management of private financial portfolios. We find that while all three countries have similar public pension systems, older Americans benefit from more developed and better-funded public and private pension systems, as well as individual management of risky financial portfolios. We find that educational and health attainments of household heads and household wealth lead to a greater tendency to hold and manage risky assets. Our decomposition analysis also shows that the gap in stock ownership in Asian countries relative to the US is attributable to lower development levels of financial and pension markets. However, these gaps are shrinking more recently. |
| JEL: | G11 G12 G32 G51 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29649&r= |
| By: | Jakub Fodor; Oliver Roehn; Hyunjeong Hwang |
| Abstract: | The Slovak population is set to age rapidly in the next decades, with significant impacts on economic growth and the sustainability of public finances. At the same time, the labour market exit age in Slovakia is among the lowest in the OECD. We use administrative data for Slovakia between 2013 and 2020 to analyse what factors influence the probability of employment exit of older workers. We find that statutory retirement ages have an important influence on the decision to leave employment. Higher educational attainment is associated with later employment exit, suggesting that the employment rate of older workers is likely to increase in the future as younger generations have higher educational attainment. We also find evidence that workers in sectors that are physically more demanding are exiting employment earlier. Impaired health also leads to significantly earlier employment exits. Finally living in a rural area or in areas with high unemployment is associated with earlier exit from the labour market. |
| Keywords: | ageing, labour supply, older workers, statutory retirement ages |
| JEL: | J21 J26 |
| Date: | 2022–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1700-en&r= |
| By: | Duda-Nyczak, Marta |
| Abstract: | In the context of the rapidly advancing population ageing, the region of Latin America and the Caribbean is currently facing an unprecedented challenge of adapting to the transformed - yet, still evolving - age structure of the population. The paper provides a regional synthesis of the National Transfer Accounts on the basis of the most recent NTA estimates from 10 LAC countries. Despite the greatly varying length of the per capita lifecycle surplus among the countries, the regional average stands at 26 years, with individuals below 30 and above 56 years old experiencing periods of deficits. At the aggregate level, children and youths continue being the biggest ‘burden’ to the regional economy and their deficit is mainly financed by private transfers. Public transfers are the principal financing flow of the older persons’ deficit. Using the UN population projections, the paper further illustrates the potential impacts of the expected demographic changes. |
| Keywords: | POBLACION, DINAMICA DE LA POBLACION, ASPECTOS DEMOGRAFICOS, ASPECTOS SOCIALES, ASPECTOS ECONOMICOS, OBJETIVOS DE DESARROLLO SOSTENIBLE, ENVEJECIMIENTO, INFANCIA, ADOLESCENTES, JUVENTUD, PROYECCIONES DE POBLACION, POPULATION, POPULATION DYNAMICS, POPULATION ASPECTS, SOCIAL ASPECTS, ECONOMIC ASPECTS, SUSTAINABLE DEVELOPMENT GOALS, AGEING, CHILDHOOD, ADOLESCENCENTS, YOUTH, POPULATION PROJECTIONS |
| Date: | 2021–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col045:47418&r= |
| By: | Alice Zulkarnain; Matthew S. Rutledge |
| Abstract: | Many countries have adopted policies to encourage people to work longer, which is a powerful lever for improving retirement security. In addition to the financial boost, some research suggests that longer working lives may be beneficial to physical, mental, and cognitive health, by keeping workers active in body and mind. Delayed retirement may also preserve social connections. On the other hand, continued work under stressful or physically demanding conditions may reduce health and could shorten an individual's lifespan. Establishing whether delayed retirement has a positive or negative net effect on health and longevity is crucial to forging an effective and humane retirement policy. This brief, based on a recent study, takes advantage of a policy change in the Netherlands – a tax credit aimed at encouraging Dutch workers to keep working into their mid-60s – to examine the effect of delayed retirement on the most important aspect of health: longevity. The discussion proceeds as follows. The first section explains why a causal effect of delayed retirement on mortality is hard to pin down. The second section describes the Dutch tax policy change, the Doorwerkbonus, and how this natural experiment is used to estimate the causal effect for older men. The third section presents the results on how delayed retirement affects mortality. The final section concludes that men who worked longer due to the policy change saw their mortality rate in their 60s fall from about 8 percent to 6 percent. This result implies about a two-month increase in their life expectancy if the improvement is limited to ages 62-65, but if the impact is longer lasting, it could raise life expectancy more substantially. |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-8&r= |
| By: | Anek Belbase; Patrick Hubbard; Alicia H. Munnell |
| Abstract: | Many older Americans will need at least some longterm services and supports (LTSS) as they age. At the same time, a substantial number do not have sufficient resources to provide for LTSS care needs. The questions are whether those who cannot afford care are the same ones who need care; the extent to which Medicaid reduces any shortfalls; and the types of individuals that continue to fall short after Medicaid. This brief is the final in a three-part series examining the need and resources for LTSS among retirees. The first brief looked at the likelihood of a 65-year-old developing minimal, moderate, or severe care needs, while the second examined the resources available to 65-year-olds to cover the different levels of care. This final brief combines the findings from the two earlier studies to determine the share of individuals projected to have inadequate resources for their specific care needs and explores the extent to which Medicaid makes up the difference. The discussion proceeds as follows. The first section projects what share of older Americans may fall short of affording the care they need based on their private resources, which include both family members and the finanical means to cover paid caregivers. The second section explores the role of Medicaid and estimates the extent to which it reduces the share of individuals that fall short. The third section explores the disparities in unmet care needs across sociodemographic groups, taking account of both private resources and Medicaid. The final section concludes that while Medicaid covers a substantial share of the cost of long-term care and reduces disparities, a\ significant minority of retirees will still face varying degrees of unmet needs. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-18&r= |
| By: | Anqi Chen; Alicia H. Munnell |
| Abstract: | Whether households prefer a constant, increasing, or decreasing path of consumption in retirement has important implications for our understanding of retirement adequacy. Financial planners and researchers often assume that retirees would like to maintain a constant standard of living. Similarly, Social Security benefits are based on the premise that people want steady inflation-adjusted benefits. However, several studies suggest that retired households actually decrease their consumption over time. This brief, which reports the results of a recent study, uses data from two longitudinal surveys to examine the consumption behavior of retired households.1 The analysis builds on the existing literature by: 1) examining retirement consumption over longer periods; 2) using wealth and health to separate constrained and unconstrained households in order to determine whether any declines in consumption are driven by necessity or preferences; and 3) exploring whether, within unconstrained households, those with shorter expected lifespans have faster declines in preferred consumption. The discussion proceeds as follows. The first section provides background on retirees' consumption preferences. The second section describes the data and methodology. The third section presents the results, which show that when households have assets and their health, they keep real consumption relatively flat over their retirement. This pattern is evident when comparing wealthy and healthy households separately and when comparing groups by health status within the top wealth tercile. For those with less wealth or with health issues, consumption declines as households age. In terms of life expectancies, households that expect to live longer, such as married households, have flatter consumption. The final section concludes that wealth and health constraints or longevity expectations may be important reasons that consumption drops over time for retired households as a group. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-21&r= |
| By: | Anek Belbase; Alicia H. Munnell; Anqi Chen |
| Abstract: | The potential need for long-term services and supports (LTSS) can be a significant source of anxiety for older workers, retirees, and their families. A central question driving this anxiety is whether the support that retirees might need can be met without exhausting their financial resources and family caregivers. The first brief in this three-part series concluded that about 20 percent of retirees will escape the need for LTSS and 80 percent will need at least a year of part-time support – with around a quarter requiring full-time support for several years. This brief, the second in the series, explores the extent to which retirees’ financial and non-financial resources together could meet different levels of care needs. The discussion proceeds as follows. The first section provides an overview of the types of care older adults typically receive. The second section explains the methodology for estimating the support that various family members and financial resources can provide. The third section describes the results, and reports that, at age 65, only about one-fifth of retirees have the family and financial resources to cover high intensity care for at least three years and about onethird do not have any resources at all. The remaining half of older adults lie somewhere in between. As one would expect, resources vary by marital status, education, and race. The concluding section looks ahead to the final brief, which will consider both the risk of needing support and the resources available to identify the types of people who are most likely to face unmet needs. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-16&r= |
| By: | Anqi Chen; Alicia H. Munnell |
| Abstract: | A major question is how COVID-19 has affected the claiming of Social Security benefits. Preliminary reports indicate that some older workers who lost their jobs or were fearful of the virus did turn to Social Security, but an official accounting will not be available for a year. The purpose of this brief is to provide a baseline against which to assess COVID’s impact. The discussion proceeds as follows. The first section describes the claim-year data published annually by the U.S. Social Security Administration (SSA) and the birth cohort data used in this analysis. The second section presents claiming ages by cohort. The final section concludes that the share of people claiming Social Security retired-worker benefits when they reach age 62 has been falling since the mid-1990s, with only a brief upward tick during the Great Recession. |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-9&r= |
| By: | Richard B. Freeman |
| Abstract: | This chapter analyzes the implications of the unexpected 2020-2021 COVID-19 pandemic for work and retirement in the U.S. The pandemic induced the greatest loss of jobs in the shortest period of time in U.S. history. A slow economic recovery would surely have endangered work longer/retire later policies that seek to adjust the finances of Social Security retirement to an aging population. Boosted by the huge CARES (March 2020) and ARPA (April 2021) rescue packages, the early recovery from the COVID-19 recession was faster and stronger than the recovery from the 2007-2009 Great Recession. Even so, the pandemic greatly altered the job market, with workers suffering from long COVID having difficulty returning to work and more workers working from home. In its immediate effect and potential long-run impact, the pandemic recession/recovery is a wake-up call to the danger that shocks from the natural world pose to work and retirement. Realistic planning for the future of work and retirement should go beyond analyzing socioeconomic trends to analyzing expected unexpected changes from the natural world as well. |
| JEL: | C53 J01 J11 J20 J26 J38 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29653&r= |
| By: | Singer, Leo (University of Liverpool) |
| Abstract: | The study presents a pathway model of the risk of multimorbidity and functional limitation from childhood to old age. Childhood circumstances, measured as parents’ social class, adverse experiences and child’s health, influenced multimorbidity and functional limitation at old age indirectly via material, psychosocial and behavioural pathways. These pathways acted as magnifiers of early inequalities: they enhanced the unequal impacts of the pre-existing differences between individuals in socio-economic position, psychological connections and health. The pathway effects measured at age 50-64 years were larger than the total effects of childhood social class, adverse experiences and child’s health. Thus pre-retirement appears to be an important period for the health of ageing adults in England. However, in people suffering from complex multimorbidity the total effect of the adverse experiences of abuse and family dysfunction in childhood surpassed the effect of adult psychosocial circumstances. This suggests an early-life sensitive period for this outcome. The strength of the paper is that childhood circumstances were approached from a broader angle than the usual focus on either the material conditions or extreme experiences of children. The framework is based on a complex mediation analysis with both parallel and serial mediators where the SEM framework with latent factors is an excellent tool to handle multiple regression relationships and measurement error. |
| Date: | 2021–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:qhbx9&r= |
| By: | Anek Belbase; Anqi Chen; Alicia H. Munnell |
| Abstract: | For late-career workers and retirees, the possibility of needing care later in life is a real concern. This concern may reflect media reports of the high likelihood of infirmity and the high cost of care – particularly in nursing homes. It is easy for people to jump to the conclusion that most retirees will either need to trade in their nest egg and independence to get support in a nursing home or languish in their homes with unmet needs. Fear of dependency may make retirees reluctant to spend their 401(k) balances, depriving themselves of necessities as they age. The narrative that emerges from the academic literature, however, is more nuanced. Many people will experience only brief periods of needing care, and the burden in terms of the money spent on formal caregivers or the time spent by informal caregivers will be minimal. The goal of this three-part series of briefs is to help retirees, their families, and policymakers better understand the likelihood that 65-year-olds – over the course of their retirement – will experience disability that seems manageable, catastrophic, or somewhere in-between. This initial brief begins by describing the risk of needing different levels of support during retirement. The second brief will examine the caregivers and financial resources available to provide such assistance, and the final brief will consider both the risk of needing support and the resources available, in order to identify people who are most at risk of facing unmet needs. The discussion in this brief proceeds as follows. The first section introduces the analysis. The second section explains the methodology, including how we measure and classify support needs. The third section describes the results: about one-fifth of retirees will need no support and one-quarter are likely to experience the type of severe needs that most people dread. In between these two extremes, 22 percent will have low needs and 38 percent will have moderate needs. As one would expect, needs vary by marital status, education, race, and self-reported health. The final section looks ahead to the next two briefs. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-10&r= |
| By: | Bertrand Achou; Philippe De Donder; Franca Glenzer; Marie-Louise Leroux; Minjoon Lee |
| Abstract: | COVID-19 outbreaks at nursing homes during the recent pandemic, which received ample media coverage, may have lasting negative impacts on individuals' perceptions regarding nursing homes. We argue that this could have sizable and persistent implications for savings and long-term care policies. We first develop a theoretical model predicting that higher nursing home aversion should induce higher savings and stronger support for policies subsidizing home care. We further document, based on a survey on Canadians in their 50s and 60s, that higher nursing home aversion is widespread: 72% of respondents are less inclined to enter a nursing home because of the pandemic. Consistent with our model, we find that the latter are much more likely to have higher intended savings for older age because of the pandemic. We also find that they are more likely to strongly support home care subsidies. Les épidémies de COVID-19 survenues dans les maisons de retraite au cours de la récente pandémie, qui ont fait l'objet d'une large couverture médiatique, peuvent avoir un impact négatif durable sur la perception qu'ont les individus des maisons de retraite. Nous soutenons que cela pourrait avoir des implications importantes et persistantes pour les politiques d'épargne et de soins à long terme. Nous développons d'abord un modèle théorique prédisant qu'une aversion plus élevée pour les maisons de retraite devrait induire une épargne plus importante et un soutien plus fort aux politiques de subvention des soins à domicile. Nous démontrons ensuite, à partir d'une enquête menée auprès de Canadiens âgés de 50 à 60 ans, que une plus grande aversion pour les maisons de retraite est largement répandue : 72% des répondants sont moins enclins à entrer dans une maison de retraite en raison de la pandémie. Conformément à notre modèle, nous constatons que ces derniers sont beaucoup plus susceptibles d'avoir une épargne prévue plus élevée pour la vieillesse en raison de la pandémie. Nous constatons également qu'ils sont plus susceptibles de soutenir fortement les subventions pour les soins à domicile. |
| Keywords: | Pandemic Risk,Nursing Home,Long-Term Care,Savings,Public Policy, Risque de pandémie,Maisons de retraite,Soins de longue durée,Ãconomies Politique publique |
| JEL: | D14 H31 H51 H53 I10 I31 |
| Date: | 2021–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2021s-35&r= |
| By: | Di Novi, C.; Paruolo, P.; Verzillo, S. |
| Abstract: | This study exploits individual data from the 8th wave of the Survey of Health, Ageing and Retirement in Europe (SHARE) and the SHARE Corona Survey to investigate the mental health consequences of COVID-19 job disruption across different European countries. It focuses on older workers (aged 50 and over) who were exposed to a higher risk of infection from COVID-19 and were also more vulnerable to the risk of long-term unemployment and permanent labour market exits during economic downturns. The relationship between job disruption in times of COVID-19 and older workers' mental health is investigated using differences in country-level employment legislation regimes. European countries are clustered into three macro-regions with high, intermediate and low employment regulatory protection regulations, using the Employment Protection Legislation (EPL) aggregate score proposed by the OECD. Results reveal a clear EPL gradient: job disruption has a positive and significant impact on older workers’ psychological distress especially in those countries where EPL is more binding. The present findings suggest possible mitigating measures for older unemployed in the European countries with higher Employment Protection legislation. |
| Keywords: | european countries; covid-19 pandemic; job disruption; mental health; older workers; EPL; |
| JEL: | I14 I18 J08 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:22/03&r= |
| By: | Jean-Pierre Aubry |
| Abstract: | Retiring baby boomers are increasing the demand for Social Security Administration (SSA) services at a time when budget constraints and retiring staff are limiting the agency’s capacity to deliver these services. In theory, investing in web-based tools for benefit applications could help SSA meet the projected increases in demand, even with fewer staff. But, despite SSA’s investment in tools with significant labor-saving potential, such as online benefit application, the share of retirees applying for benefits online has hovered around 50 percent since 2013. To investigate recent and future trends in online claiming, the CRR surveyed 2,600 people ages 57-70 about how they claimed, or intend to claim, their retirement benefits and their communications with SSA during the process. This brief, based on a recent paper, presents the results of that survey.1 The discussion proceeds as follows. The first section sheds some light on the recent trends in online claiming and estimates that only 70 percent of the roughly 50 percent currently submitting online applications – just over 35 percent of retirees – claim completely online (that is, without contacting SSA in-person or by phone). The second section investigates why most retirees contact SSA when claiming benefits. The third section considers options for SSA to increase the share of retirees who claim completely online. The final section concludes that new policies – and greater familiarity with online tools among younger cohorts – could significantly increase the share of retirees that claim online, but a meaningful share will continue to contact SSA in-person or by phone. |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2022-1&r= |
| By: | Matthew S. Rutledge; Alice Zulkarnain; Sara Ellen King |
| Abstract: | When women become mothers, their labor market income often takes a substantial hit. This “motherhood earnings penalty” becomes even larger with each additional child and permanently reduces earnings throughout mothers’ worklives. Previous studies have linked the penalty to mothers’ reduced educational attainment, more time out of the workforce, higher job search costs, and poor job matches. What remains unanswered is the extent to which the penalty impacts women’s retirement income. This brief, based on a recent study, answers part of this question by looking at how Social Security provisions address the motherhood penalty. The discussion proceeds as follows. The first section explains how Social Security can impact the motherhood earnings penalty and reduce retirement income shortfalls for mothers. The second section lays out the data and methodology for this analysis. The third section finds that Social Security offsets a substantial portion of the earnings penalty. The final section concludes that – despite the equalizing role played by Social Security – a motherhood earnings penalty will remain without policy intervention, such as earnings credits for caregivers. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-11&r= |
| By: | Marianne Laurin; Pierre-Carl Michaud; Derek Messacar |
| Abstract: | Tax deductions on contributions to registered savings vehicles are a common policy tool used by governments in many industrialized countries to encourage people to save for retirement. However, these plans do not typically lock in funds, which means savers may also withdraw before retirement when their marginal tax rates are still high and forgo the tax benefit. In this paper, we investigate the extent to which pre-retirement savings withdrawals respond to changes in the net-of-tax benefit of withdrawing and whether such behavior depends on the saver’s financial literacy. To that end, we link respondents of a nationally representative financial capability survey from Canada to over 15 years of administrative tax data. Our results show that the correlation between savings withdrawals and the effective marginal tax rate is negative for those with higher financial literacy, but much weaker and sometimes statistically insignificant for those with lower financial literacy. The findings suggest that financial literacy is an important determinant of the extent to which tax-deductible savings plans are used efficiently. Les déductions fiscales sur les contributions aux véhicules d'épargne enregistrés sont un outil politique commun utilisé par les gouvernements de nombreux pays industrialisés pour encourager les gens à épargner pour leur retraite. Cependant, ces plans ne bloquent généralement pas les fonds, ce qui signifie que les épargnants peuvent également retirer leurs fonds avant la retraite lorsque leur taux d'imposition marginal est encore élevé et renoncer à l'avantage fiscal. Dans cet article, nous étudions dans quelle mesure les retraits d'épargne avant la retraite répondent à des changements dans l'avantage net d'impôt du retrait et si ce comportement dépend de la littératie financière de l'épargnant. À cette fin, nous relions les répondants d'une enquête sur les capacités financières représentative au niveau national au Canada à plus de 15 ans de données fiscales administratives. Nos résultats montrent que la corrélation entre les retraits d'épargne et le taux d'imposition marginal effectif est négative pour les personnes ayant une meilleure culture financière, mais beaucoup plus faible et parfois statistiquement non significative pour les personnes ayant une moindre culture financière. Les résultats suggèrent que la littératie financière est un déterminant important de la mesure dans laquelle les plans d'épargne déductibles de l'impôt sont utilisés efficacement. |
| Keywords: | tax-preferred savings accounts,retirement savings,financial literacy, comptes d'épargne à fiscalité privilégiée,épargne-retraite,éducation financière |
| JEL: | G53 G51 D14 |
| Date: | 2021–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2021s-36&r= |
| By: | Katelouzou, Dionysia; Micheler, Eva |
| Abstract: | This contribution examines the connection between investor capitalism and sustainable investment. It will be observed in this article that investor capitalism has gone through a structural change. Individual investors have been replaced by funds. Financial service providers have emerged that assist investors in managing and holding investments. This development coincided and was arguably facilitated by the growth in workplace and personal pensions. Pensions are subsidised by the government through tax relief. This financial contribution of the government is justified on social policy grounds. But it has the effect that pension savers, who receive substantial return by saving tax, are deprived of a reason to take an interest in how their money is invested. This not only deprives the service providers assisting pension savers from oversight from their ultimate customers. It also can help to explain why pension savers do not actively select investment products but rely on the default settings suggested by their employers. If the government is serious about encouraging investor capitalism to bring about sustainable business it should start with its own financial contribution, which has coincided with the emergence of the current model of investor capitalism, and connect pension tax relief to sustainable investment practices. |
| Keywords: | sustainable investment; green investment; social investment; pension tax relief; ESG; stewardship; sovereign wealth funds; retail investors; workplace pensions; personal pensions; pension trustees; independent governance committees; auto-enrolment; NEST; disclosure; kay review; Springer deal |
| JEL: | F3 G3 J1 |
| Date: | 2022–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:113380&r= |
| By: | John Edward Sabelhaus; Jeffrey P. Thompson |
| Abstract: | In this paper, we present updated measures of racial disparities in wealth using the most recent data from the Survey of Consumer Finances (SCF), augmented by household-level estimates of defined benefit (DB) pension wealth developed by Sabelhaus and Volz (2020). Including this important asset, we find that racial wealth disparities are smaller than the numbers typically discussed in other research or in the media, but the disparities remain substantial. The paper proceeds by exploring two specific factors that have long been identified as playing potentially important roles in generating disparities in wealth by race, namely differences in earnings (education/human capital) and intergenerational transfers in the form of inheritances and inter vivos gifts. We contribute to the existing literature by introducing several data innovations in the exploration of these factors using the SCF. We augment the SCF data with individual-level lifetime earnings histories (developed by Jacobs et al. 2020, 2021) and enhanced measures of intergenerational transfers (developed by Feiveson and Sabelhaus 2018, 2019). We also create an expanded set of variables that reflect the range of pension coverage and generosity across workers. With all three of these new data components, we use non-parametric decomposition techniques to estimate their contributions to racial wealth gaps between white and non-white families. Differences in lifetime earnings, pension generosity, and a handful of other human capital and work-related variables explain three-quarters of the white/Black wealth gap and 80 to 90 percent of the white/Hispanic gap. Reweighting white family wealth to match the distribution of human capital traits of families of “other” races (including Asian, Native American and other groups) raises counterfactual white wealth to the level of “other” family wealth, nearly closing the white/“other” gap. Differences in intergenerational transfers are found to account for 13 to 16 percent of white/non-white private wealth gaps, although much of the influence of these transfers likely works through the human capital channel. Policies that successfully increase skills, employment, earnings, and pension coverage among low-wealth Black and Hispanic families will make important contributions to closing wealth gaps. |
| Keywords: | racial wealth gap; inequality; human capital; lifetime earnings; retirement plans; pensions; inheritance |
| JEL: | D31 D14 D63 J15 J24 J32 |
| Date: | 2021–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:93709&r= |
| By: | Gregg, Paul; Kanabar, Ricky |
| Abstract: | The rapid widening of intergenerational wealth inequalities has led to sharp differences in living standards in Great Britain. Understanding which components of wealth are driving such inequalities is important for improving wealth and social mobility. We show the change in the intergenerational persistence in wealth in Great Britain is due to inequality in offspring housing wealth and that offspring homeownership has become increasingly stratified by parental wealth even after controlling for individual’s own characteristics. Our findings imply the intergenerational wealth elasticity in housing wealth is set to double in approximately one century and highlight the increasingly important role parental wealth has for determining whether offspring hold and the rate at which they accumulate particular types of wealth. |
| Date: | 2022–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2022-02&r= |
| By: | Alicia H. Munnell; Patrick Hubbard |
| Abstract: | The U.S. Social Security Administration recently announced a 2022 cost-of-living adjustment (COLA) of 5.9 percent – the largest since the early 1980s. But critics continue to argue that the Consumer Price Index (CPI-W) currently used for adjusting Social Security benefits does not reflect the spending of older Americans on health care and therefore understates inflation. They urge the adoption of a special price index intended to reflect the spending patterns of Social Security beneficiaries – the experimental CPI-E. While historically the CPI-E, which covers those ages 62 and over, has risen faster than the CPI-W, the old relationship between the two indexes appears to have changed. In fact, if the 2022 COLA had been based on the CPI-E, it would have been 4.8 percent rather than the actual 5.9 percent. This brief explores the changing relationship between the CPI-W and the CPI-E. The discussion proceeds as follows. The first section describes the calculation of the CPI-W, used for Social Security. The second describes the CPI-E and its limitations. The third reports the relationship between the CPI-W and the CPI-E since 1983 and shows how it has changed in recent years. The fourth section identifies the factors that have narrowed the difference between the two measures. The final section concludes that a major reason for the disappearing differential has been the slowdown in the growth of medical care costs over the past two decades. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-19&r= |
| By: | Dugan, Anna; Prskawetz, Alexia; Raffin, Natacha |
| Abstract: | It is widely accepted that environmental and demographic changes will significantly influence the future of our society. In recent years, an increasing number of studies has analyzed the interlinkages among economic growth, environmental factors and a specific demographic variable, namely life expectancy, applying an overlapping generations framework. The aim of this survey is threefold. First, we review the role of life expectancy and pollution for sustainable growth. Second, we discuss the role of intervening factors like health investment and technological progress as well as institutional settings including government expenditures, tax structures and inequality. Finally, we summarize policy implications obtained in different models and compare them to each other. |
| Keywords: | Environmental quality,Pollution,Longevity,Endogenous growth,Government policy |
| JEL: | O11 O44 Q56 Q58 J10 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:012022&r= |
| By: | Alicia H. Munnell; Patrick Hubbard |
| Abstract: | This fall, the U.S. Social Security Administration is likely to announce that benefits will be increased by around 6 percent beginning January 1, 2022. This cost-of-living-adjustment (COLA), which would be the largest in 40 years, is an important reminder that keeping pace with inflation is one of the attributes that makes Social Security benefits such a unique source of retirement income. A spurt in inflation, however, affects two other factors that determine the net amount that retirees receive from Social Security. The first is the Medicare premiums for Part B, which are deducted automatically from Social Security benefits. To the extent that premiums rise faster than the COLA, the net benefit will not keep pace with inflation. The second issue pertains to taxation under the personal income tax. Because taxes are levied on Social Security benefits only for households with income above certain thresholds ($25,000 for single taxpayers and $32,000 for joint returns) and the thresholds are not adjusted for wage growth or inflation, rising benefit levels subject more benefits to taxation – again reducing the net benefit. This brief explores the interaction of inflation and Social Security benefits. The first section describes the nature of the COLA. The second section looks at the interaction of Medicare premiums and the COLA. The third section explores how inflation affects the taxation of benefits. The final section concludes that, while the inflation adjustment in Social Security is extremely valuable, the rise in Medicare premiums and the extension of taxation under the personal income tax limits the ability of beneficiaries to fully maintain their purchasing power. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2021-14&r= |
| By: | Cisotto, Elisa; Meli, Eleonora; Cavrini, Giulia |
| Abstract: | In this article we explore the last two decades of changes in the demography of grandparenthood in Italy, by means of a set of measures: the proportion of men and women becoming grandparents by age and time, the age at transition to grandparenthood and its crossing with a set of life events and the length of grandparenthood. We used data from the four waves of the Survey on Family and Social Subjects carried out by the Italian National Institute of Statistics in 1998, 2003, 2009 and 2016. Overall, the median age at which half of the population over 35 is made up of grandparents moved forward by at least 5 years during the two observed decades. The postponement of grandparenthood is evident in middle age: between 55 and 64 the ratio of grandparents to non-grandparents decreased significantly by about 10 per cent. Overall, among people who had ever had children, the median age at the transition to grandparenthood advanced by three years from 1998 to 2016, both for men (59 to 62) and women (54 to 57). This difference is greater than that observed for age at parenthood and equal to the advantage gained in terms of life expectancy at age 60. Thus, although grandparenthood has been postponed over the last two decades in Italy, the great gains in remaining life expectancy result in grandparent-grandchildren lifetime not being reduced. |
| Date: | 2021–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:4nh5e&r= |
| By: | Bridge, Catherine; Zmudzki, Fredrick; Huang, Tracy; Owen, Ceridwen; Faulkner, Debbie |
| Abstract: | This research looks at how smart home assistive technologies (AT) may be best used in both the aged care and disability sectors to reduce the need for support services. It includes an assessment of ease of use, quality-of-life and cost benefit analysis, and contributes to the development of policy options that could facilitate effective adoption of smart home AT in Australia. |
| Date: | 2021–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:43rvw&r= |
| By: | Veerle Van Loon; Koen Decancq |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:2109&r= |
| By: | Motohiro Yogo (Princeton University and NBER); Andrew Whitten (U.S. Department of the Treasury); Natalie Cox (Princeton University) |
| Abstract: | We document new facts about bank and retirement account participation, based on the universe of U.S. households with a member aged 50 to 59 in administrative tax data. Financial participation is much higher than that reported in survey data, especially for low-income households. However, financial participation declines among low-income households from 2008 to 2018. Geographic variation in financial participation relates to income rather than racial composition or access to financial services. Based on instrumental variables, we estimate a large impact of access to employer retirement plans on retirement account participation for low- and middle-income households. |
| Keywords: | Financial participation, Household finance, Inequality, Racial disparities, Tax policy |
| JEL: | D14 G51 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2021-28&r= |
| By: | Mohamed Ali Ben Halima (CEET - Centre d'études de l'emploi et du travail - Ministère du Travail, de l'Emploi et de la Santé - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche, LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM], TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique); Camille Ciriez (CEET - Centre d'études de l'emploi et du travail - Ministère du Travail, de l'Emploi et de la Santé - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche, ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique); Malik Koubi (DARES - Direction de l'animation de la recherche, des études et des statistiques - Ministère du Travail, de l'Emploi et de la Santé, CEET - Centre d'études de l'emploi et du travail - Ministère du Travail, de l'Emploi et de la Santé - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche); Ali Skalli (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - UP2 - Université Panthéon-Assas - SU - Sorbonne Université) |
| Abstract: | En 2010, la France a réformé son système de retraite en augmentant de 2 ans l'âge d'ouverture des droits avec une période de transition relativement courte, ne s'étendant qu'entre les générations 1950 et 1955. Si l'objectif affiché est bien l'augmentation de l'offre de travail des seniors et la réduction du déficit des caisses de l'assurance-retraite, plusieurs études montrent que ce type de réforme engendre aussi des effets collatéraux comme le déversement vers des régimes alternatifs tels que le chômage ou l'invalidité. Dans cet article, nous mobilisons la base administrative Hygie 2005-2015 pour explorer un autre de ces effets indirects : celui sur les absences-maladie. Si un tel effet s'avérait significatif, cela impliquerait qu'en cherchant à réduire le déficit des caisses d'assurance-retraite, la réforme a aussi creusé celui de l'assurance-maladie. Nous considérons alternativement diverses mesures de l'absence-maladie et montrons que la réforme des retraites a bel et bien entrainé une augmentation significative des arrêts-maladie et ce, pour l'ensemble de la population, mais avec des effets différenciés selon le genre : plus prononcés pour les femmes s'agissant de la probabilité d'arrêt et du nombre d'arrêts, ils le sont moins s'agissant de la durée de ces arrêts. |
| Keywords: | Labour supply,Réforme des retraites,Absence-maladie,Offre de travail,Sick leave |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03507914&r= |