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on Economics of Ageing |
| By: | Ospina-Tejeiro Juan J; Ramos-Forero Jorge Enrique; López-Valenzuela David Camilo; Hernández-Turca Yurany; Herrera-Pinto Nicolle Valentina |
| Abstract: | Este documento presenta proyecciones sobre el gasto fiscal asociado con Colpensiones y los regímenes especiales que conforman el sistema pensional de Colombia con las normas vigentes en 2024. Bajo supuestos convencionales sobre longevidad, formalidad y una tasa de crecimiento económico de largo plazo del 3, 3%, el gasto público en pensiones se mantendría en niveles inferiores al 3, 6% del PIB durante la mayor parte del siglo XXI, y luego caería al 2, 8% del PIB hacia el año 2100. Sin embargo, las proyecciones cambian significativamente al considerar algunos riesgos en torno a estos supuestos clave. En primer lugar, al modificar el supuesto de crecimiento económico a la luz de las proyecciones demográficas y del crecimiento histórico de la productividad, el gasto público en pensiones como porcentaje del PIB podría aumentar al 8% hacia finales del siglo. En segundo lugar, el aumento en la longevidad de la población ejercería una presión fiscal adicional durante la segunda mitad del siglo, aumentando en aproximadamente un 0, 3% del PIB anualmente, solamente por su impacto en Colpensiones. En tercer lugar, paradójicamente, un aumento en la formalidad laboral, también podría elevar el gasto en Colpensiones en aproximadamente un 0, 3% del PIB anualmente debido a los subsidios implícitos en el sistema. Es importante tener en cuenta estos riesgos en cualquier reforma al sistema, toda vez que la transición demográfica es un fenómeno en curso cuyo impacto fiscal puede ser exacerbado o reducido dependiendo del monto y la cobertura de los subsidios implícitos en el sistema pensional. **** ABSTRACT: This document presents projections on the fiscal expenditure associated with Colpensiones and the special regimes that make up Colombia's pension system under the rules in force in 2024. Under conventional assumptions about longevity, formality, and a long-run economic growth rate of 3.3%, public spending on pensions would remain at levels below 3.6% of GDP for most of the 21st century, and then fall to 2.8% of GDP by 2100. However, the projections change significantly when considering some risks around these key assumptions. First, by modifying the assumption of economic growth in light of demographic projections and historical productivity growth, public spending on pensions as a percentage of GDP could increase to 8% by the end of the century. Second, an increase in the longevity of the population would exert additional fiscal pressure during the second half of the century, increasing by approximately 0.3% of GDP annually, solely due to its impact on Colpensiones. Third, paradoxically, an increase in labor formality could also raise spending on Colpensiones by approximately 0.3% of GDP annually due to the subsidies implicit in the system. It is important to consider theses risks in any system reform, since the demographic transition is an ongoing phenomenon whose fiscal impact can be exacerbated or reduced depending on the amount and coverage of the implicit subsidies in the pension system. |
| Keywords: | Pensiones, regímenes de pensiones, finanzas públicas, tendencias demográficas, envejecimiento poblacional, Pensions, pension systems, public finances, demographic trends, public finances, population aging. |
| JEL: | H55 J11 J26 E60 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:borrec:1271&r= |
| By: | Jens-Christian Høj; Viktoriia Klimchuk |
| Abstract: | Before the war, the Ukrainian Pay-As-You-Go pension system required large government transfers. Since then, large scale emigration and an increasing number of people eligible for pensions have further increased the need for government transfers and exacerbated the challenges of population ageing. At the same time, the system provides relatively low pension benefits, despite fairly high contribution rates and short time in retirement. This reflects to a large degree a relatively narrow contribution base due to a large informal economy and underreporting of labour income. Reform of the system must encourage participation, secure liveable pensions, and safeguard the system’s fiscal sustainability. |
| Keywords: | informal labour markets, old-age poverty, pension systems, Public finances |
| JEL: | E6 H55 I32 J46 |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1805-en&r= |
| By: | Meiyi Zhuang; Xinyi Zhang; Hisahiro Naito |
| Abstract: | Health is one of the most critical factors that affects retirement behavior, and poor health may lead to early retirement among middle-aged and older adults. In China, where the population is aging rapidly, early retirement has significant implications for the economy. Recent studies have shown that air pollution, particularly PM2.5, can cause various illnesses, such as respiratory diseases, cardiovascular diseases, high blood pressure, and diabetes. In this paper, we analyze the effects of PM2.5 on the retirement and health of middle-aged and elderly people, assuming that the effects of air pollution on retirement are highly nonlinear and different for farmers and non-farmers. To control for potential endogeneity, we use 2SLS estimation. The regression results for non-farmers show that higher PM2.5 concentrations increase the probability of heart-related diseases and early retirement behavior. Specifically, we found that a 10 microgra per cubic meters(about one standard deviation) per cubic meter increase in PM2.5 concentration is associated with a 58% increase in the probability of heart-related diseases and a 57% increase in early retirement. This implies that roughly 12.1 million people could continue participating in the labor market if the government can reduce PM2.5 concentration by 10 microgram per cubic meter across the country. For farmers, we found that higher PM2.5 concentration is associated with a higher probability of lung-related diseases, but we did not find evidence that it increases early retirement. For both non-farmers and farmers, we did not find evidence that a higher PM2.5 concentration decreases financial wealth. These findings suggest that higher air pollution deteriorates the health of non-farmers, increases the disutility of work, and induces early retirement but does not affect the financial wealth of farmers and non-farmers. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2024-001&r= |
| By: | Jeonyong Park (Graduate School of Economics, Keio University) |
| Abstract: | This paper aims to evaluate the income redistributive effects of various reform proposals under South Korea fs 5th National Pension Comprehensive Plan (Draft), announced by the Ministry of Health and Welfare on October 30, 2023. By conducting a simulation analysis, the study examines the reform proposals from the perspective of the income redistribution function that has been embedded in the design of the National Pension System since its inception. Using panel data from the Korean Labor & Income Panel Study (KLIPS) spanning from 1998 to 2021, we estimate the lifetime income of individual enrollees and calculate their total pension contributions. Simultaneously, we determine the pension benefit period based on the gender and cohort-specific life expectancies derived from the future life tables provided by Statistics Korea. Subsequently, we estimate the total pension benefits. The Mean Log Deviation (MLD) is calculated as a measure of income inequality to assess how each reform proposal (from Reform Proposal 1 to 6) affects income redistribution compared to the current system. Additionally, we perform a separate analysis that incorporates the disparities in contribution period and life expectancy among different income classes, reflecting the real-world inequalities in these aspects. When evaluating the income redistributive effects of each reform proposal by employment type (regular employees, non-regular employees, and the self-employed), assuming a 20-year contribution period for all enrollees, all reform proposals?including those involving increased contribution rates (Proposals 1, 2, and 3), adjustments to the rate increase speed (Proposal 4), and raised the pensionable age (Proposals 5 and 6)?demonstrated improved income redistribution. However, when reflecting the income disparities by income bracket in contribution period and life expectancy, proposals to raise the pensionable age resulted in deteriorated income redistribution across all employment types. This outcome is attributed to the exacerbation of intragenerational income redistributive effects. Based on these analysis results, it is confirmed that while the Korean government fs proposed National Pension reforms?aiming to maintain long-term fiscal balance by increasing contribution rates, adjusting the speed of rate increases by generation, and raising the pensionable age?differ in their income redistributive effects under the same fiscal goal. Particularly, raising the pensionable age could potentially worsen income redistribution for enrollees across all employment types. |
| Keywords: | National Pension reform, Income Redistribution, Intragenerational Income Redistribution, Mean Log Deviation (MLD), South Korea |
| JEL: | D31 H23 H55 |
| Date: | 2024–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:2024-013&r= |
| By: | Claire Borsenberger; Helmuth Cremer; Denis Joram; Jean-Marie Lozachmeur; Estelle Malavolti |
| Abstract: | We study the design of optimal (private and/or social) insurance schemes for formal home care and institutional care. We consider a three period model. Individuals are either in good health, lightly dependent or heavily dependent. Lightly dependent individuals can buy formal home care which reduces the severity of dependency and reduces the probability to become severely dependent in the next period. Severely dependent individuals pay for nursing home care. In both states of dependency individuals can receive a (private or public) insurance benefit (transfers). These benefits can be flat or depend on the formal care consumed (or a combination of the two). These benefits are financed by a premium (or a tax). Individuals may be alive until the end of period 2 or die at the beginning of periods 1 or 2 with a certain probability which may depend on their state of health. The laissez faire is inefficient because individuals consume a too low level of formal home care and are not insured. The first-best insurances scheme requires a transfer to lightly dependent individuals that, (under some conditions) increases with the amount of formal home care consumed. Severely dependent individuals, on the other hand, must receive a flat transfer (from private or social insurance). The theoretical analysis is illustrated by a calibrated numerical example which show that the expressions have the expected sings under plausible conditions. |
| Keywords: | long-term care insurance, formal home care, nursing home care |
| JEL: | I13 I18 H51 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11112&r= |
| By: | Lee, King Fuei |
| Abstract: | The momentum effect is postulated to be a consequence of the disposition effect, which in turn, is a result of the interplay between the typically dominant diminishing sensitivity feature of prospect theory and the loss aversion feature. However, studies have shown that older individuals can exhibit a reverse disposition effect due to their heightened loss aversion compared to younger individuals. This paper hypothesises that as the population ages, the disposition effect of the average investor starts to diminish, thereby inducing a corresponding weakening of the momentum effect. We find empirical evidence showing that the long-horizon momentum profits are negatively related to changes in the proportion of the older population. |
| Keywords: | Momentum, demographics, prospect theory, loss aversion, diminishing sensitivity, aging population, disposition effect |
| JEL: | G12 J14 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120931&r= |
| By: | Vanya Horneff; Raimond Maurer; Olivia S. Mitchell |
| Abstract: | Almost 50 million Americans are burdened by the need to repay almost $2 trillion in student loan debt, while at the same time having to save for retirement. This article analyzes the potential impact of the 2022 SECURE 2.0 Act reform which permits employers to match contributions for student loan repayments, in 401(k) plans. Our calibrated lifecycle model measures the impact of this reform on heterogeneous households’ financial behavior and welfare. We show that, post-reform, employees will repay more loan debt but reduce own retirement plan contributions, offset by higher employer-matching contributions that take loan repayments into account. |
| JEL: | D14 D91 G11 G22 G51 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32443&r= |
| By: | Steven Brakman; Tristan Kohl; Charles van Marrewijk |
| Abstract: | Population forecasts indicate that the world is facing massive demographic changes during the 21st century. This does not only involve the development of the total global population, but (more importantly) will also affect the population and age distribution across countries in a fundamental way. In this paper we focus on the income consequences of these changes for the global income distribution. Key in this respect are changes in the so-called demographic dividend associated with the share of the working-age population in the total population. We link the predicted long-run changes of the demographic dividend to income projections. Our findings are as follows. First, show that historically the impact of demography on economic growth indicates that a one per cent higher demographic dividend results in about 0.22 percentage points higher growth rate. Second, we use UN population projections on population size and the associated age-distribution to predict income changes for the remainder of this century. Third, we illustrate how the center of income gravity shifts from advanced economies, like Europe and North America, towards developing and emerging economies, like South Asia and Africa. This potentially has consequences for the current global economic powers, that will see their influence on world affairs decline. |
| Keywords: | demography, income |
| JEL: | F43 J11 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11108&r= |
| By: | Hellwagner, Timon (Institute for Employment Research (IAB), Nuremberg, Germany); Weber, Enzo (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Regensburg) |
| Abstract: | "Advanced economies will face population decline in the years and decades to come, particularly among those of working age. Yet, there is little empirical evidence of corresponding labor market implications. Tackling this shortcoming from a historical macroeconomic point of view, we compile a new dataset for sixteen advanced economies, covering demographic and labor market variables on an annual basis from 1875 to 2019. Based on a dynamic, nonlinear econometric model, we identify structural population shocks by using lagged births as external instruments for working-age population inflows and outflows, and trace the economic effects conditionally on the demographic regime. Our results suggest regime-specific differences: First, population decline quickly passes through to the labor market, translating into swifter disinvestment and decline in employment, but the effects of population growth take time. Second, in times of population decline, labor force participation increases as a response to reduced labor supply. Likewise, initially swift disinvestment tendencies decelerate. Consequently, we find only incomplete capital adjustment. Third, despite a declining labor supply, we find neither a decrease in unemployment nor any significant changes in wages as indicators of shortage. Finally, while population decline tends to depress total factor productivity, as also suggested by the literature, our results indicate that negative effects for economic growth are mitigated by increases in participation and the capital-labor ratio." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation ; Auswirkungen ; Beschäftigungseffekte ; Bevölkerungsrückgang ; demografischer Wandel ; Erwerbsbeteiligung ; Industrieländer ; Arbeitslosigkeitsentwicklung ; internationaler Vergleich ; Investitionen ; Kapitalintensität ; Lohnentwicklung ; Produktivitätseffekte ; Arbeitskräfteangebot ; Wirtschaftswachstum |
| JEL: | E22 E24 J11 J21 |
| Date: | 2024–03–15 |
| URL: | https://d.repec.org/n?u=RePEc:iab:iabdpa:202405&r= |
| By: | Holger Strulik; Volker Grossmann |
| Abstract: | In this paper, we examine the effects of the Covid-19 pandemic on individual aging and longevity with special focus on socioeconomic disparities in health outcomes. We also explore the individual-specific effects of Long Covid. We develop and calibrate a health economic model based on principles of the biology of human aging that captures the interaction between infections and chronic health deficits. Our analysis suggests that neglecting this interaction leads to a gross underestimation of the long-term health impact of the pandemic. Our model also explains large socioeconomic health differences that can be attributed to infection protection behavior. |
| Keywords: | Covid-19, Long Covid, health behaviour, health deficits, health inequality, protection aversion, false beliefs, longevity |
| JEL: | D15 I10 I12 J24 J26 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11104&r= |
| By: | Enrique Devesa; Mar Devesa; Inmaculada Domínguez; Borja Encinas; Robert Meneu |
| Abstract: | El objetivo de este trabajo es analizar con todo el detalle posible cómo se han comportado los individuos en cuanto a la edad de acceso a la jubilación y cómo se estima que ello afecte al gasto en pensiones, contestando a preguntas como: ¿Se han producido menos jubilaciones anticipadas y más jubilaciones demoradas? ¿Las jubilaciones anticipadas se han concentrado en la parte intermedia del periodo de anticipación permitido? ¿Cuánto ha aumentado la edad efectiva de jubilación? ¿En qué grado se ha optado por el cheque único frente al 4% anual de bonificación en las demoradas? ¿Qué factores determinantes son los más significativos para elegir el cheque único? ¿Cómo se espera que el aumento de la edad efectiva afecte al gasto enpensiones en términos de PIB? Para contestar a todo ello, se utilizarán tanto estadísticas de la Seguridad Social para los datos agregados (años 2022 y 2023) como la Muestra Continua de Vidas Laborales (MCVL) en su edición de 2022 para los datos detallados. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaeee:eee2024-16&r= |