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Using longitudinal data for the period 1968-2005 for a sample of male household heads, we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes, including earnings, income, and consumption. We have seven main findings. First, disability rates are high. We divide the disabled along two dimensions based on the persistence and severity of their work-limiting condition. We estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years, and a 19 percent chance that he has begun a chronic and severe disability. Second, the economic consequences of disability are frequently profound. Ten years after disability onset, a person with a chronic and severe disability on average experiences a 68 percent decline in earnings, a 32 percent decline in after-tax income, a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption. Third, the various economic consequences differ sharply across disability groups. The outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled. Fourth, our findings show the partial and incomplete roles that individual savings, family support and social insurance play in reducing the consumption drop that follows disability. Only about half of this most disabled group reports receiving Social Security Disability Insurance or Supplemental Security Income. Fifth, we find a noticeable fall in earnings and income prior to the onset of a reported disability. Consumption also falls somewhat, suggesting that future disability is partially but incompletely predictable in the short run. Sixth, time use and detailed consumption data further indicate that disability is associated with a decline in well- being. Seventh, the quantities we have estimated, combined with elasticities from the literature, allow us to examine the optimality of current compensation for the disabled. We find that the current compensation for our most disabled group appears to be lower than is optimal.

We estimate a stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and longevity in the U.S. over the period 1965-2005. We estimate that technological change and the increase in the generosity of health insurance on their own may explain 36% of the rise in health spending (technology 30% and insurance 6%), while income explains only 4% and other health trends 0.5%. By simultaneously occurring over this period, these changes may have led to complementarity effects which we find to explain an additional 57% increase in health spending. The estimates suggest that the elasticity of health spending with respect to changes in both income and insurance is larger with co-occurring improvements in technology. Technological change, taking the form of increased health care productivity at an annual rate of 1.3%, explains almost all of the rise in life expectancy at age 25 over this period, while changes in insurance and income together explain less than 10%. Welfare gains are substantial and most of the gain appears to be due to technological change.

Population aging and the burden it imposes on state finances is one of the major economic challenges governments around the world face. Responses are formulated in terms of either increasing employment (for example by raising the retirement age) or increasing productivity (investment in education). This paper brings together these two responses in a unified framework and shows how the individual’s education and retirement decisions are affected by population aging – caused either by a fall in the population growth rate, or an increase in life expectancy - and the budget balancing mechanism of the public pension systems. We discuss how a budget balancing mechanism can be informed by fairness considerations and we show that early retirement can be the result of the application of Musgrave’s rule in response to a fall in fertility.

We analyse the relationship between the application of specific measures for older employees (SMOE) and job duration of workers aged 40 and above. Using longitudinal employer-employee data for German establishments, we account for worker and establishment heterogeneity and correct for stock-sampling. We find a positive relation of mixed-aged team work to job duration and a negative relation of specific part-time addressed at older workers. Job duration does not appear to be related to other SMOE, such as training and specific equipment of workplaces. Our findings suggest that only certain specific measures for older employees alter employee retention.

We compare in a laboratory experiment two audit-based tax compliance mechanisms that collect fines from those found non- compliant. The mechanisms differ in the way fines are redistributed to individuals who were either not audited or audited and found to be compliant. The first, as is the case in most extant tax systems, does not discriminate between the unaudited and those found compliant. The second targets the redistribution in favor of those found compliant. We find that targeting increases compliance when paying taxes generates a social return. We do not find any increase in compliance in a control treatment where individuals audited and found compliant receive symbolic rewards. It is not the mere assigning of rewards, but the material incentives inherent in the rewards that improve compliance. We conclude that existing tax mechanisms have room for improvement by rewarding financially those audited and found compliant.

This paper presents new empirical evidence on the effects of retirement benefits on labor force participation decisions. We use administrative data on the census of private sector employees in Austria and variation from mandated discontinuous changes in retirement benefits from the Austrian pension system. We present graphical evidence documenting labor supply responses to the policy discontinuities. Next, we develop nonparametric procedures to estimate labor supply elasticities based on the graphical evidence and mandated financial incentives. We estimate elasticities of 0.12 for men and 0.38 for women. These relatively low elasticities highlight that many retirement decisions are likely to be affected by factors beyond only financial incentives from retirement benefits.

The costs of state and local pension plans have been a source of fiscal stress in many states and communities. This has led legislatures to consider major changes in these plans. In order to assess the fiscal and staffing consequences of plan changes it is important to develop reliable statistical models of employee retirement behavior. Structural models are valuable in this regard since the proposed reforms often involve fundamental changes in plan design such as a transition from a defined benefit (DB) to a defined contribution (DC) or hybrid plan. In this paper the authors estimate a structural model of teacher retirement behavior using administrative panel data. They show that the Stock-Wise (1990) option value model provides a good fit to the data and predicts well out-of-sample when used to forecast the effect of pension enhancements during the 1990's. The structural model is used to simulate the effect of several DC alternatives to the current DB plan.

This paper investigates changes in health behaviours upon retirement, using data drawn from the Survey of Health Ageing and Retirement in Europe. By exploiting changes in eligibility rules for early and statutory retirement, we identify the causal effect of retiring from work on smoking, alcohol drinking, engagement in physical activity and visits to the general practitioner or specialist. We provide evidence about individual heterogeneous effects related to gender, education, net wealth, early-life conditions and job characteristics. Our main results--obtained using fixed-effect two-stage least squares--show that changes in health behaviours occur upon retirement and may be a key mechanism through which the latter affects health. In particular, the probability of not practicing any physical activity decreases significantly after retirement, and this effect is stronger for individuals with higher education. We also find that different frameworks of European health care systems (i.e. countries with or without a gate-keeping system to regulate the access to specialist services) matter in shaping individuals' health behaviours after retirement. Our findings provide important information for the design of policies aiming to promote healthy lifestyles in later life, by identifying those who are potential target individuals and which factors may affect their behaviour. Our results also suggest the importance of policies promoting healthy lifestyles well before the end of the working life in order to anticipate the benefits deriving from individuals' health investments.

Unlike private sector employers, public school districts generally offer more than one type of supplemental retirement savings plan and allow multiple vendors to offer products. Using individual-level payroll data from over half of the public school districts in North Carolina coupled with data from an employer survey, this study examines how inter-district differences in supplemental plan administration are related to participation in these savings vehicles. We find wide variation in total participation rates and in 403(b) plan participation rates in particular, even among this population of public-sector workers with the same defined benefit pension plan, health plan, and retiree health coverage. Individual and district characteristics explain some, but not all, of the variation observed.

This paper develops a consumption and portfolio-choice model of a retiree who allocates wealth among four assets: a riskless bond, a risky asset, a real annuity, and housing. Unlike previous studies that treat health expenditures as exogenous negative income shocks, this paper builds on the Grossman model to endogenize health expenditures as investments in health. I calibrate the model to explain the joint evolution of health status and the composition of wealth for retirees, aged 65 to 96, in the Health and Retirement Study. I use the calibrated model to assess the welfare gains of an actuarially fair annuity market. The welfare gain is less than 1% of wealth for the median-health retiree at age 65, and the welfare gain is about 10% of wealth for the healthiest.

Human capital embodies the knowledge, skills, health, and values that contribute to making people productive. These qualities, however, are hard to measure, and quantitative studies of human capital are typically based on the valuation of the lifetime income that a person generates in the labor market. This article surveys the theoretical and empirical literature that models a worker's life-cycle earnings and identifies appropriate discount rates to translate those cash flows into a certainty equivalent of wealth. We begin with an overview of a stylized model of human capital valuation with exogenous labor income. We then discuss extensions to this framework that study the underlying economic sources of labor income shocks, the choices that people make during their lives (such as about work, leisure, retirement, and investment in education), and the implications of these factors for human capital valuation and risk.

Public sector employees receive large fractions of their lifetime income in the form of deferred compensation. The introduction of the opportunity provided to Illinois public school employees to purchase additional pension benefits allows me to estimate employees' willingness-to-pay for benefits relative to the cost of providing them. The results show employees are willing to pay 20 cents on average for a dollar increase in the present value of expected retirement benefits. The findings suggest substantial inefficiency in compensation and cast doubt on the ability of deferred compensation schemes to attract employees. (JEL H75, I21, J26, J45)

Default contribution rates for 401(k) pension plans powerfully influence workers’ choices. Potential causes include opt-out costs, procrastination, inattention, and psychological anchoring. We examine the welfare implications of defaults under each of these theories. We show how the optimal default, the magnitude of the welfare effects, and the degree of normative ambiguity depend on the behavioral model, the scope of the choice domain deemed welfare-relevant, the use of penalties for passive choice, and other 401(k) plan features. Depending on which theory and welfare perspective one adopts, virtually any default contribution rate may be optimal. Still, our analysis provides reasonably robust justifications for setting the default either at the highest contribution rate matched by the employer or – contrary to common wisdom – at zero. We also identify the types of empirical evidence needed to determine which case is applicable.

We estimate the effect of 70 y Más, an age-conditioned cash transfer program for individuals age 70 and older in rural Mexico, on the labor force participation of beneficiaries and of younger individuals who live with them. Using data from the 2010 Mexican census, we exploit the age and locality population thresholds to identify the effects of the program, which at the time operated only in localities with less than 30,000 inhabitants. We find that the program reduces the labor force participation of elderly men, particularly those who live alone and who are relatively poor, but has a much weaker effect on that of elderly women. The program has no statistically significant effect on the labor force participation of either prime-age men or women who live with potential beneficiaries, and it has a negative and significant effect on the labor force participation of boys age 12-17, particularly those in the lowest wealth quintiles, but not on that of same-age girls. These results suggest that the program affects mostly the labor supply of the intended beneficiaries and that of marginal workers, like adolescent boys.

Sweden is one of the few Western economies to have undertaken a large pension reform in recent years. This was done with great expectations, but little formal analysis. In this paper we develop a life cycle labor supply model to quantify the predicted labor supply implications of this reform. In our framework, individuals choose when to stop working and, given eligibility criteria, when/if to apply for disability and pension benefits. Agents are heterogeneous in skills and receive exogenous shocks to health throughout their life. We find that the new pension system creates large incentives for the continued employment of older workers. This is promising news for countries grappling with pension reform, and indicates that there are significant lessons to be learned from the Swedish case.

Despite the fact that the increasing involvement of the private sector in pension provision has brought more flexibility to the pay-out phase of retirement, little is known about the characteristics of those who choose to annuitize their pension wealth and those who do not. I combine unique micro-data from a large Swedish occupational pension plan with rich national administrative data to study the choice between life annuities and fixed-term payouts with a minimum payout length of 5 years for 183,000 retiring white-collar workers. I find that low accumulation of assets is strongly associated with the choice of the 5-year payout. Consistent with individuals selecting payout length based on private information about their mortality prospects, individuals who choose the 5-year payout are in worse health, exhibit higher ex-post mortality rates and have shorter-lived parents than annuitants. Individuals also seem to respond to large, tax-induced changes in annuity prices.

This paper examines how unemployment late in workers' careers affects the timing of their retirement. Using data from the Survey of Income and Program Participation from 1996 to 2011, we document that unemployed workers permanently leave the labor force at a significantly higher rate than employed workers. This effect is stronger once workers become eligible for social security benefits and it is significantly dampened by the eligibility for unemployment insurance benefits. Unemployed workers, particularly those workers in households with below median wealth, also have a significantly higher social security uptake rate shortly after turning 62 than employed workers. We find little evidence for housing or stock market effects on the timing of retirement.

It is well established that consumption is “hump” shaped over an individual's lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with the standard lifecycle model with consumption smoothing. Using a unique dataset with detailed administrative records of credit and debit card transactions, we show the hump shaped lifecycle consumption pattern as documented in the literature. Additionally, we show compositional changes in consumption expenditures across individuals in the years surrounding retirement confirming the results of Aguiar and Hurst (2005, 2013).

The purpose of this paper is to estimate with the help of econometric methods, how sensitive the labour supply of elderly is to the changes in the pension system. We first analyze how a hypothetical increase of pension eligibility age would influence the economic activity of such individuals. The results of the simulation model show that a 5-year increase of pension eligibility age (up to 65 years for men and 60 years for women) would lead to an increase of economic activity of those whom this reform will concern by 11-14 pct. We next analyze how elderly would react to the changes in the pension legislation, which came into force in the beginning of 2015, in particular, the possibility to defer retirement in order to receive a higher pension later. Our estimates show that this mechanism gives incentives to postpone retirement only for women, but not for men.

A tanulmány egyéni szinten vizsgálja a munkaerő-felmérésben mért és a nyugdíjbiztosító nyilvántartásaiban megjelenő foglalkoztatás viszonyát. Az elemzés olyan munkavállalókra vonatkozik, akik saját bevallásuk szerint 2008 elején már két vagy több éve dolgoztak ugyanannál a munkáltatónál. Az 1999-2006-ra vonatkozó adatok szerint az állásban töltött idő 10-11 százaléka nem szerepelt a nyilvántartá sok ban, ebből 8-9 százalék esetében feltételezhető, hogy be nem jelentett munkáról van szó. A munkaerő-felmérésben megjelenő, de többnyire részlegesen sem adózó munkaviszonyok leggyakrabban a mezőgazdaságban, a szállításban és az atipikus foglalkoztatási formákban fordulnak elő. Journal of Economics Literature (JEL) kód: J46, J26., The paper merges data from the Labour Force Survey and the Pension Directorate to apply a labour input" or discrepancy" method of measuring informal employment at individual level. It relates to workers interviewed in January-March 2008 who reported two or more years of uninterrupted tenure with their employer. Data for 1999-2006 suggest that some 10-11 per cent of the working time reported in the Labour Force Survey failed to appear in the Pension Directorate registers, of which some 8-9 per cent can be explained as undeclared work. Informal work occurs most often in agriculture, transport, and various forms of atypical work.

In this paper we compare changes in asset allocations between mutual funds held in defined contribution pension plans and funds held by other investors. We investigate how flows into equity and fixed income mutual funds depend on macroeconomic conditions. We find that defined contribution plans react more sensitively to these conditions, suggesting effects on mutual fund managers and other investors.

Ez a tanulmány a Nyugdíj és Időskor Kerekasztal (NYIKA) keretében végzett közös kutatásunk eredményeinek összefoglalása, Augusztinovics Mária legutolsó munkáinak egyike. A NYIKA 2007 és 2009 közötti időszakban azt vizsgálta, hogy milyen változatokat tart lehetségesnek a működő nyugdíjrendszer elkerülhetetlen reformjának megvalósítására. Ezek között mi egy olyan rendszer kidolgozását javasoltuk, amelyben a társadalombiztosítási nyugdíj egy része alapnyugdíj, míg a másik rész egy szigorúan járulékfüggő nyugdíj lenne. Az alapnyugdíj bevezetése mindenekelőtt a végletes időskori szegénység elkerülését szolgálná, de egyúttal lehetővé tenné a munkát terhelő járulékok jelentős mértékű csökkentését is. A járulékfüggő nyugdíjat pontrendszerben terveztük, aminek célja a járulékok és a nyugdíjak közötti közvetlen kapcsolat megteremtése, valamint az automatikus indexálás megvalósítása. Emellett fontosnak tekintettük azt is, hogy egy ilyen rendszerben a biztosítottak minden életszakaszban felmérhetik, hogy mekkora az általuk már megszolgált várható nyugdíj mértéke. A számítási eredmények mutatják, hogy ez a rendszer megvalósítható és fenntartható lenne.* Journal of Economics Literature (JEL) kód: H55, J21, J26., The paper summarizes joint work in the framework of the Pension and Old Age Round-Table, one the most recent works done by Mária Augusztinovics. Between 2007 and 2009, the round-table investigated various potential variants for the inevitable reform of the current pension system. Of these, the authors proposed finalizing a public pension system in which part would be basic (flat) benefit and part strictly contributive. First, introduction of a basic pension would serve to ease old-age poverty while opening room for a significant reduction in earnings-based pension contributions. The contributive part would be based on a points system, creating a direct link between contributions and benefits and achieving automatic indexation. Furthermore, such a system would facilitate calculating expected benefits at each stage in life. Calculations show such a system is feasible and sustainable.

This paper investigates the relationship between share prices and mental health, exploiting the availability of interview dates in the British Household Panel Survey to match the level and changes in the FTSE All Share price index to respondents over the period 1991-2008. We present evidence that the level, 6 month and yearly changes in the share price index are associated with better mental health while greater uncertainty, as measured by index volatility, is associated with poorer mental well-being. Finally, using several proxies of investor status, we find little evidence that this relationship is confined to holders of equity based assets, suggesting that the observed relationship does not arise via wealth effects. Instead, it appears as though share prices matter to mental health because they perform the role of economic barometer.

A tanulmány empirikusan elemzi a nyugdíjkorhatár emelésének azonnali foglalkoztatási hatását. Az általános korhatár születési évjáratokhoz és nemekhez kötődő és egyik évről a másikra élesen változó 1997 és 2009 közötti emelkedése teszi lehetővé az oksági kapcsolat hiteles vizsgálatát a különbségek különbsége módszerével. Az eredmények azt mutatják, hogy az előrehozott nyugdíjkorhatár változása jelentős hatást gyakorolt a női foglalkoztatásra: az átlagosan 45 százalékos foglalkoztatási arány mintegy 5-7,4 százalékponttal emelkedett. A korbetöltött nyugdíjazás esetében ilyen hatás nem figyelhető meg. Ennek oka az, hogy a rokkantnyugdíjazás növekedése ellensúlyozta az öregségi nyugdíj igénybevételének csökkenését.* Journal of Economics Literature (JEL) kód: H31, H55, J14, J26., The paper provides empirical evidence of the effect of changing the retirement age on employment. Based on individual data from Hungary, where the retirement age rose in a number of stages between 1997 and 2009, the analysis benefits from substantial variation in pension eligibility over a relatively short time. It takes a difference/indifference approach and is supported by independent variation in the age-based eligibility rule that contributes to causal identification of the effect. Results suggest that the effect of the changes in early retirement age is substantial, amounting to a 5-7.4 percentage point increase in the 45 per cent employment rate of retirement-age women. Changes in the normal retirement age do not seem to have such an employment effect, because they are counteracted by increases in disability pension claims.

A central justification for social insurance and for other policies aimed at retirement savings is that individuals may fail to make adequate provision during their working years. Much research has focused on myopia and other behavioral limitations. Yet little attention has been devoted to how these infirmities, and government policies to rectify them, influence labor supply. This linkage could be extremely important in light of the large pre-existing distortion due to income and consumption taxation and income-based transfer programs. For example, might myopic individuals, as a first approximation, view payroll taxes and other withholding to fund retirement savings as akin to an income tax, while largely ignoring the distant future retirement benefits that they fund? If so, the distortion of labor supply may be many times higher than otherwise, making savings-promotion policies much more costly than appreciated. Or consider what may be the labor supply implications for an individual who is defaulted into higher savings and, as a consequence, sees concomitantly lower take-home pay. This essay offers a preliminary, conceptual exploration of these questions. In most of the cases considered, savings policies do not act purely like a tax despite individuals’ non-optimizing savings behavior, and in some cases labor supply actually is raised, not lowered, in which event policies that boost savings may be significantly more welfare-enhancing than recognized. Accordingly, there is a compelling need for empirical exploration of the interaction between nonoptimal savings behavior and labor supply.

Using data from China's Urban Household Survey and exploiting China's mandatory retirement policy, we use the regression discontinuity approach to estimate the impact of retirement on household expenditures. Retirement reduces total non-durable expenditures by 20 percent. Among the categories of non-durable expenditures, retirement reduces work-related expenditures and expenditures on food consumed at home but has an insignificant effect on entertainment expenditures. After excluding these three components, retirement does not have an effect on the remaining non-durable expenditures. It suggests that the retirement consumption puzzle might not be a puzzle if a life-cycle model with home production is considered.

We investigate the effect of an acute health shock on retirement among elderly male workers in Denmark, 1991-1999, and in particular whether various welfare state programs and institutions impinge on the retirement effect. The results show that an acute health event increases the retirement chances of elderly male workers by 8%, and that this increase in the baseline retirement probability is not affected by eligibility to early exit programs and persists even after accounting for selection due to take-up of disability pension. Neither is it affected by the relatively long duration of sickness benefits in Denmark nor by the promotion of corporate social responsibility initiatives since the mid-1990s. In the late 1990s, however, the retirement rate following a health shock is reduced to 3% with the introduction of the subsidized employment program (fleksjob) but this effect is on the margin of being significant. For the most part, the retirement effect following a health shock seems to be immune to the availability of a multitude of government programs for older workers in Denmark.

Purpose– The purpose of this paper is to analyse the determinants of hiring and exit rates by age at the firm level and firm-level age segregation in hirings and separations in Finland.Design/methodology/approach– The use Finnish linked employer-employee data from 1990 to 2004. The authors present a decomposition of employment change by age group to disentangle the roles of hirings and exits from factors related to demographics effects. Firm-level analysis is conducted using regression models for the hiring rates and shares of different age groups and for the probability of hiring older employees. Similar models are estimated for the exits of older employees. Segregation is analysed using age segregation curves and Gini indices calculated from them.Findings– The hirings of older (50+) employees have clearly been more segregated at the firm level than the exits or the stock of old employees. Larger firms are more likely to hire older employees, but their hiring rates are lower. However, the probability of having hires or exits of older workers are much higher in large firms. The results are relatively similar for men and women.Research limitations/implications– The determinants of the probability of hiring older workers and the rate of hiring them, given that the rate is positive, are different and these two processes should be modelled separately. The Gini index of segregation may be misleading when the number of employees per firm is small. Therefore it is useful to compare segregation to a random reshuffle of employees to firms.Practical implications– Older worker who have become unemployed or who want to change their job need to have more employment opportunities. Labour and pension policies need to be monitored and designed so that there are more incentives for the individual to search for a new job and for the firms to hire older employees.Originality/value– The authors provide new empirical evidence of age segregation and hiring prospects of older employees. Age segregation has previously been examined in occupations, but the authors extend the analysis to firm-level segregation. The authors suggest a new decomposition of the rate of employment change to the hiring and exit rates and to a cohort effect.

Oregon's Public Employees Retirement System (PERS) is a rich setting in which to study the effect of pension design on employer costs and employee retirement-timing decisions. PERS pays retirees the maximum benefit calculated using three formulas that can be characterized as defined benefit (DB), defined contribution (DC), and a combination of DB and DC. From the employer's perspective, we show that this "maximum benefit" calculation is costly. Average ex post retirement benefits are 54% higher than they if had been calculated using only the DB formula. Monte Carlo simulations verify that the higher cost could have been predicted at the start of our sample period. From the employee's perspective, we show that plan design distorts the retirement-timing decision: employees receiving DC benefits are significantly more likely to retire before the normal retirement age than employees receiving DB benefits. Exploiting two sources of exogenous variation in the level of the DC benefit, we show that employees respond to within-year variation in their retirement incentives and, consistent with peer effects, that they respond more strongly to these incentives when more of their coworkers face similar incentives. Finally, consistent with the emerging literature on financial mistakes by households, we show that a small but significant fraction of retirees would benefit from shifting their retirements by as little as one month.

Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. Income from private pensions, assets, and earnings are relatively more important for higher-income elderly individuals, who have more diverse income sources. The trend from private sector defined benefit to defined contribution pension plans has shifted responsibility for retirement security to individuals. A significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving.

The reform of the pension system of the Mexican Social Security Institute (IMSS) in 1997, limited the growing fiscal cost of the previous pay-as-you-go scheme. Sixteen years on from its creation, the Retirement Savings System (SAR) has had favourable macroeconomic effects for Mexico, as it has significantly increased financial savings and encouraged the development of local financial markets.However, the employment and pension coverage has not developed as hoped, due to the high rate of informality in the labour market. In addition, the replacement rates (RR) forecast for old-age pensions from the defined-contribution scheme will be low, due to problems exogenous to the pension system, such as low contribution rates and low contribution densities. The main objective of this study is to develop a macroeconomic and actuarial projection model to simulate the expected coverage and RR for the period 2012–2050, within the framework of a demographic and economic forecast that will allow a detailed diagnosis of the current conditions of the pension system. The results reveal the unpromising scenario that the pension system has and will continue to have in the long term, with limited improvements in coverage rates. The possibility of obtaining adequate pensions will be restricted to those who have socioeconomic conditions with a long employment history, who can thus make contributions to their individual accounts.Taking into account this baseline projection scenario, we simulate the expected effects of applying a set of proposals with the aim of tackling the main problems, such as the low coverage, low RR, and low level of participation by young people in the system.

This paper examines the impact of exposure to higher unemployment rates in the pre-retirement years on subsequent mortality. Although past research has found that recessions reduce contemporaneous mortality, these short-term effects may reverse over time, particularly for older workers. If workers experience an economic downturn in their late 50s, they may face several years of reduced employment and earnings before "retiring" when they reach Social Security eligibility at age 62. They also may experience lost health insurance, and therefore higher financial barriers to health care, through age 65, when Medicare becomes available. All of these experiences could contribute to weaker long-term health outcomes. To examine these hypotheses, we use Vital Statistics mortality data between 1969 and 2008 to generate age-specific cohort survival probabilities at older ages. We then link these survival probabilities to labor market conditions at earlier ages. We also use data from the 1980-2010 March Current Population Surveys and the 1991-2010 Behavioral Risk Factor Surveillance System surveys to explore potential mechanisms for this health effect. Our results indicate that experiencing a recession in one's late 50s leads to a reduction in longevity. We also find that this exposure leads to several years of reduced employment, health insurance coverage, and health care utilization which may contribute to the lower long-term likelihood of survival.

Ein Teil des aktuellen Rentenpakets der Bundesregierung ist die abschlagsfreie Altersrente mit 63 Jahren für besonders langjährig Versicherte. Diese Regelung bevorteilt hauptsächlich Personen, die früh in das Erwerbsleben eingetreten sind. Der Barwert ihrer Rente ist durch den früheren Bezug bei gleichen Beitragsjahren höher. Darüber hinaus sind die neuen Regeln so ausgestaltet, dass die rentennahen Jahrgänge bis 1958 überproportional davon profitieren. Die jährlichen Mehrausgaben von über 9 Mrd.€ werden hauptsächlich durch die höheren Abgaben der jungen Beitrags- und Steuerzahler finanziert. Daneben werden jedoch auch die Bestandsrentner durch eine ausbleibende Rentenwertanhebung an den Mehrkosten beteiligt. Insgesamt profitieren von den beschlossenen Reformen vor allem die geburten- und damit auch wählerstarken Kohorten der Babyboomer-Generation, wohingegen heutige und zukünftige Beitragszahler die Hauptlasten tragen.

Im Rahmen der Bildungsexpansion hat sich die Bildungsbeteiligung der Frauen aus der Babyboomer- Kohorte deutlich erhöht. Die Frage ist, ob das gestiegene Bildungsniveau vermittelt über die Erwerbs - verläufe der Frauen auch zu höheren Rentenanwartschaften führt. Hinsichtlich dieser Frage werden drei Geburtskohorten (Kriegs-Kohorte (1936–45), Nachkriegs-Kohorte (1946–55) und Babyboomer-Kohorte (1956–65)) miteinander verglichen. Der besondere Fokus wird auf die Kohorte der Babyboomer gelegt, da diese stark von der Bildungsexpansion in den 1970er Jahren profitiert haben. Es konnte festgestellt werden, dass trotz des gestiegenen Bildungsniveaus der Frauen die Rentenanwartschaften über die Kohorten hinweg relativ stabil bleiben. Der vorliegende Beitrag zeigt, dass die Erhöhung des Bildungs - niveaus von Frauen nicht genügt, um höhere Rentenanwartschaften zu erreichen bzw. um Altersarmut von Frauen zu vermeiden.

Magyarországon a társadalombiztosítási nyugdíjrendszer finanszírozása a következő évtizedek demográfiai átmenete során fokozódó terhet fog róni az állami költségvetésre. A tanulmány egy magyar gazdaságra kalibrált, kis, nyitott gazdaság (kockázati felárat, együttélő korosztályokat tartalmazó) neoklasszikus növekedési modelljében - ahol a gazdasági szereplők munkakínálata és megtakarítása reagál a nyugdíjrendszer ösztönzőire - vizsgálja meg, hogyan hat a demográfiai átmenet a nyugdíjkassza GDP-arányos egyenlegére és a makrováltozók pályájára, illetve meghatározza, hogy egyes parametrikus nyugdíjreformok hogyan módosítják a hatásokat. A cikk fő következtetése, hogy mind a demográfiai átmenet hatásainak értékelésében, mind a parametrikus nyugdíjreformok hatásainak vizsgálatában érdemes számolni a háztartások munka- és tőkekínálati reakcióival, mert jelentősen befolyásolják a makrováltozók pályáját és a nyugdíjrendszer fenntarthatóságát.* Journal of Economic Literature (JEL) kód: C61, D91, H55, J11, J26., Financing the social-security pension system will weigh heavily on Hungarys government budget during the demographic transition. The paper takes a neoclassical growth model of a small open economy with overlapping cohorts, calibrated for the Hungarian economy, where the labour supply and household savings respond to the incentives of the pension system, and explores how the demographic transition affects the GDP-proportional balance of the pension system and the path of the macroeconomic variables. It determines how parametric pension reforms alter the effects. The results show that in assessing the demographic transition it is important to consider the labour and capital supply responses of households, as they influence considerably the path of the macroeconomic variables and the sustainability of the pension system.

This study evaluates knowledge regarding financial and retirement planning in Puerto Rico. Most people seem to be unprepared to take charge of financial decisions and retirement. Lusardi and Mitchell (2006) study shows that many households are unfamiliar with even the most basic economic concepts needed to make savings and investment decisions. This study uses a questionnaire to evaluate financial knowledge and retirement planning in Puerto Rico. For the most part, this questionnaire was developed using Lusardi and Mitchell (2007, 2001a, 2011b) questionnaires. The results suggest a lack of knowledge in these matters; although respondents answered they get informed about financial and retirement matters. Most of them state they prepare a household budget but results suggest they do not use them appropriately. Many respondents are unfamiliar with even the most basic economic concepts needed to make savings and investment decisions. When asked about retirement, near 60 percent have tried to estimate the amount needed for retirement but less than 50 percent of them have tried to design a plan for their retirement. Of those who have made plans, less than 40 percent have met their goals and only 14 percent are very confident that they will have enough resources at retirement.

Groezen-Leers-Meijdam [2003] cikkéből kiindulva a lehető legegyszerűbben modellezzük a következő problémát: a kormányzat gyermektámogatási és nyugdíjrendszert működtetve serkenti a dolgozókat gyermekszülésre, és nyugdíjjal pótolja a "rövidlátó" dolgozók elégtelen megtakarítását. Bevezetjük a dolgozók hitelkorlátját, és kiterjesztjük a szerzőhármas elemzését heterogén nevelési költségekre és gyermektámogatásokra. Két fő eredményünk: 1. a transzferrendszer növelésekor át kell ugrani azt a szakadékot, amely a jólét kezdeti csökkenése miatt keletkezik; 2. bár a termékenységfüggő nyugdíjak bevezetése növeli az átlagos termékenységet, de csökkenti a társadalmi jólétet, és erősítheti a termékenység heterogenitását. Journal of Economic Literature (JEL) kód: D10, H55, J13, J14, J18, J26., Starting out from the study by Van Groezen, Leers and Meijdam (2003), the author analyses the following problem in the simplest possible model: the government operates family-support and pension systems to raise fertility and replace insufficient old-age saving of myopic workers respectively. Hungary imposes credit constraint on workers, and this paper extends the studys analysis to heterogeneous rearing costs and to enjoyment of having children. Two major results emerge. (i) Enlarging the transfer system involves jumping the gap created by the initial drop in welfare needs. (ii) Although the introduction of fertility-dependent pensions raises average fertility, it diminishes social welfare and may strengthen heterogeneity in fertility.

The reform of the pension system in Poland took place in 1999, when the one-pillar Pay-As-You-Go system (PAYG) was replaced by the three-pillars system consisting of two mandatory (PAYG and fully funded) pillars and voluntary (funded) one. However problems concerning budget deficit in Poland caused that the Polish government introduced significant changes in distribution of the pension contribution between both mandatory pillars and in the pension funds’ portfolio composition in 2011 and 2013. The aim of this study is to analyze the performance of the pension funds operating in Poland in the years 1999-2013. Applying Sharpe and Treynor ratios the study provides evidence that well diversified portfolio protects pensioners’ interest better than portfolios constructed due to the new rules.

Since 2007, the labor force participation rate has fallen from about 66 percent to about 63 percent. The sources of this decline have been widely debated among academics and policymakers, with some arguing that the participation rate is depressed due to weak labor demand while others argue that the decline was inevitable due to structural forces such as the aging of the population. In this paper, we use a variety of approaches to assess reasons for the decline in participation. Although these approaches yield somewhat different estimates of the extent to which the recent decline in participation reflects cyclical weakness rather than structural factors, our overall assessment is that much - but not all - of the decline in the labor force participation rate since 2007 is structural in nature. As a result, while we see some of the current low level of the participation rate as indicative of labor market slack, we do not expect the participation rate to show a substantial increase from current levels as labor market conditions continue to improve.

We report results from a field experiment in which a randomized subset of newly hired workers at a large financial institution received a flyer containing information about the employer's 401(k) plan and the value of contributions compounding over a career. Younger workers who received the flyer were significantly more likely to begin contributing to the plan relative to their peers in the control group. Many workers do not participate in their employers' supplemental retirement savings programs, even though these programs offer substantial tax advantages and immediate returns due to matching contributions. From a survey of new hires we find that many workers choose not to contribute to the plan because they have other financial priorities. However, some non-participants lack the financial literacy to appreciate the benefit. These findings indicate that simple informational interventions can nudge workers to participate in retirement saving plans and enhance individual well-being and retirement income security.

In seinem Kommentar nimmt Eckart Bomsdorf, Universität zu Köln, Stellung zu den Rentenreformplänen der Bundesregierung. Seiner Meinung nach enthält der Gesetzesentwurf sowohl Positives, z.B. bei der Erwerbsminderungsrente, als auch Widersprüchliches, z.B. bei der sogenannten Rente mit 63. Die volle Rentenkasse verführe zu Wohltaten. Vernachlässigt werde, dass die Belastungen für die Rentenversicherung dauerhaft seien, die in der Rentenkasse vorhandenen Ersparnisse jedoch nur einmal ausgegeben werden könnten.

Nach langen Verhandlungen haben sich SPD und CDU/CSU auf eine Große Koalition geeinigt. Ulrich Kater, Deka Bank, sieht in dem Koalitionsvertrag »viel Pragmatismus in Bezug auf die Befriedigung von Anspruchsgruppen, wenig Vor­ausschauendes auf künftige Herausforderungen, negative Konsequenzen werden in der Zukunft versteckt«. Für Ronnie Schöb, Freie Universität Berlin, startet die Bundesrepublik Deutschland mit der Einführung des Mindestlohns 2015 ein riskantes sozialpolitisches Experiment. Der Mindestlohn gefährde die sozialpolitischen Ziele, die die Große Koalition in ihrem Koalitionsvertrag selbst festgeschrieben habe. Er führe weder zu einer gerechteren Verteilung noch entlaste er die Staatskasse, dafür aber gefährde er Arbeitsplätze. Michael Bräuninger, WeltWirtschaftsInstitut (HWWI) und Helmut-Schmidt-Universität Hamburg, beurteilt die Koalitionsvereinbarung »im Allgemeinen gut, aber im Konkreten problematisch«. So finde sich im Koalitionsvertrag ein wichtiges Bekenntnis zum Industriestandort. Besonders kritisch seien aber einige Entscheidungen im Bereich der Arbeitsmarkt- und Sozialpolitik. Ingo Kramer, Bundesvereinigung der Deutschen Arbeitgeberverbände, unterstreicht, dass aus wirtschaftlicher Sicht vieles nicht hilfreich sei, manches aber in die richtige Richtung gehe. Um die Beschäftigungserfolge der letzten Jahre nicht zu gefährden, dürfe etwa die Flexibilisierung des Arbeitsmarkts nicht zurückgedreht werden.

Nach Meinung von Hans Fehr, Lehrstuhl für Finanzwissenschaft, Universität Würzburg, belastet der aktuelle Gesetzentwurf zur Reform der Rentenversicherung pauschal die Beitragszahler, konterkariert die eingeleitete Anhebung des Rentenzugangsalters und hilft nur wenig gegen die künftig steigende Altersarmut Martin Werding, Universität Bochum, sieht in den Reformpläne der Großen Koalition eine Vernachlässigung der Verbesserung der längerfristigen Perspektiven für die Rentenfinanzierung. Für Axel Börsch-Supan, Max-Planck-Institut für Sozialrecht und Sozialpolitik, München, sind die Beschlüsse der neuen Großen Koalition »kurzsichtig und einseitig: Die Wohltaten kommen der älteren Generation zugute, während es die zukünftigen Beitragszahler finanzieren müssen, die ohnehin durch den demographischen Wandel gebeutelt werden.« Alfred Boss, Institut für Weltwirtschaft Kiel, bezeichnet die Rentenreform als einen Schritt in die falsche Richtung, die Verlieren seien die nicht begünstigten Rentner und die Beitragszahler. Jörg Asmussen, Bundesministerium für Arbeit und Soziales, stellt die Überlegungen der Regierungskoalition vor. Er unterstreicht, dass an einer demographiefesten Rentenversicherung festgehalten wird, aber mit dem Rentenpaket gerechtere Ansprüche geschaffen werden. Nach Ansicht von Enzo Weber, IAB, Nürnberg, und Universität Regensburg, passen nicht alle Teile des Rentenpakets in eine wirksame Gesamtstrategie. In der Summe der finanziellen Belastungen werden Chancen auf eine Stärkung von Erwerbsanreizen durch eine Beitragssenkung vertan. Markus Kurth, MdB, Bündnis 90/Die Grünen, sieht durch die Rentenpläne Spielräume für die sozialpolitisch wichtigen Verbesserungen auf Jahre zugestellt.

Now, 25 years after the fall of the Berlin Wall, eastern and western German men are receiving similar state pensions, the main pillar in the system of old age provision in Germany. In contrast, the average pension paid to eastern German women far exceeds that of their western counterparts. A cohort comparison shows a narrowing of the gender gap when it comes to pension entitlements in eastern Germany. This decline is less a result of higher pension entitlements among eastern German women than a consequence of significant drops in pensions among eastern German men. In western Germany, however, the gender pension gap has remained consistently high throughout the cohort comparison. Western German women born in the baby boom years have only managed to narrow the gender gap to a limited extent despite their increasing labor participation. The present analysis first compares the development of average pension payments received by pensioners in eastern and western Germany who retired between 1993 and 2013. A cohort comparison analyzes the extent to which the existing East-West differences, particularly among women, are likely to continue into the future.

This paper shows by means of the concept of utility that annuitization through life annui-ties or a pension can be an efficient instrument for the economic assurance of seniors. Various quantitative arguments are presented supporting this statement (e.g. annuity equivalent wealth [AEW] is calculated using Czech data). In conclusion, some practical arguments are mentioned regarding why the real demand on life annuities contradicts this result so that a so-called annuity puzzle arises in pension practice.

The process of developing the social insurance system in Albania corresponds to its transformation from a centrally planned to free market economy. In the center of the social insurance system is the retirement fund scheme. How successful is the Albanian pension system to fulfill its functions? This paper through a descriptive analysis of the current pension system in Albania identifies issues and challenges for the development of a sustainable pension system in the context of socio-economic development of the country. The paper presents the suggestions to improve the pension situation in Albania.