Public pensions and labor supply over the life cycle

In order to remain fiscally solvent, governments of many countries have reformed their public pension schemes to encourage labor supply at older ages. These reforms include reductions in the generosity of public pensions and reduced penalties for working past the normal retirement age. In this paper, we consider how reforms to public pension systems affect labor supply over the life cycle. We put the recent empirical evidence on the effect of government pensions on labor supply in a life cycle context, and we present evidence on the effectiveness of tax reforms for stimulating labor supply over the life cycle. Our main conclusion is that the labor supply of older workers is responsive to changes in retirement incentives. The labor supply of younger workers is less responsive. Thus the trend towards lower taxes on older workers in many developed countries should continue to fuel their trend towards later retirement.     

At What Age Do You Expect to Retire? Retirement Expectations and Increases in the Statutory Retirement Age

We analyse the extent to which an increase in the statutory retirement age affects individuals' retirement expectations. Understanding how individuals adjust their expectations is crucial to the evaluation of this policy, since retirement expectations directly affect other important decisions such as labour supply, engagement in (further) education and, of course, savings and investments. We consider the 2007 German pension reform that legislated an increase in the statutory retirement age from 65 years to 67. Our analysis is based on a longitudinal study that directly asks respondents at what age they expect to retire. Using a difference‐in‐differences approach, we look at the changes in subjective retirement expectations over time and estimate the extent to which they can be attributed to the 2007 reform. We find that the reform shifted the retirement expectations of the younger cohorts, although there is some heterogeneity in the way individuals adjusted. While there are no significant differences between men and women, lower‐educated individuals failed to revise their expectations. As these individuals usually acquire both lower pension claims and lower private savings, the fact that they have been slower in updating their retirement expectations causes concern regarding their income security after retirement.     

Is Prescott right? Welfare state policies and the incentives to work, learn, and retire

This paper bolsters Prescott’s (Fed. Reserve Bank Minneap. Q. Rev. 28(1):2–13, 2004) claim that high taxes are responsible for lackluster labor market performance in Continental European countries. We develop a life-cycle model with endogenous skill formation, endogenous labor supply, and endogenous retirement. Labor taxation distorts not only labor supply, but also education and retirement decisions. Actuarially unfair pensions further exacerbate labor tax distortions on retirement. Education subsidies can nevertheless cushion the adverse impact of taxation on skill formation. Feedbacks between education, labor supply, and retirement are important. The model is simulated with realistic behavioral elasticities that are consistent with microeconometric evidence. If, besides labor supply, also learning and retirement are endogenous, the uncompensated (compensated) elasticity of the tax base equals 0.46 (0.85), which is more than twice as large as the standard uncompensated (compensated) labor supply elasticity of 0.18 (0.40). Furthermore, life-cycle interactions between education, working, and retirement are quantitatively important and the interactions raise all behavioral elasticities substantially. For example, the uncompensated labor supply elasticity increases with one-half due to life-cycle interactions (to 0.26). We demonstrate that low European labor supply can be fully explained by taxation without relying on unrealistically high labor supply elasticities. Reducing labor market distortions, cutting benefit levels, lowering tax rates, and making (early) retirement actuarially more fair, therefore, boosts labor supply, delays retirement, and stimulates skill formation. In addition, high education subsidies are needed in large welfare states to offset explicit and implicit tax burdens on human capital investment.      

Labor supply and government programs: A cross-country analysis

There are substantial cross-country differences in labor supply late in the life cycle (age 50+). A theory of labor supply and retirement decisions is developed to quantitatively assess the role of social security, disability insurance, and taxation for understanding differences in labor supply late in the life cycle across European countries and the United States. The findings support the view that government policies can go a long way towards accounting for the low labor supply late in the life cycle in the European countries relative to the United States, with social security rules accounting for the bulk of these effects.     

延迟退休年龄、内生生育率与养老金

本文通过构建内生生育率的OLG模型,从微观视角考察了延迟退休年龄对生育率、养老金替代率及其个人养老金收入的影响。研究表明:(1)延迟退休年龄会提高均衡时的生育率水平,但提高幅度非常有限。(2)生育率的提高会增加未来劳动力供给,促进养老金替代率上升和养老金收入增加,而延迟退休年龄延长了养老保险缴费期限,也会促进养老金替代率上升和养老金收入增加;但同时,延迟退休年龄将使得预防性储蓄下降,资本积累降低,工资收入下降,养老金收入降低。因此,延迟退休年龄会使养老金替代率上升。当资本产出弹性大于或等于0.5时,延迟退休年龄会使得养老金收入降低;当资本产出弹性小于0.5时,在平均预期寿命较大或养老保险缴费比例较高的情形下,养老金收入会随着退休年龄的延迟而增加,反之,其会随着退休年龄的延迟而降低。进一步地,将模型拓展到包含人力资本的情形,延迟退休年龄仍会提高均衡时的生育率与养老金替代率。     

Extensive and Intensive Margins of Labour Supply: Work and Working Hours in the US,the UK and France*

This paper provides a new analysis of the main stylised facts underlying the evolution of labour supply at the extensive and intensive margins in three countries: the United States, the United Kingdom and France. We propose a definition of the extensive and intensive margins corresponding respectively to the employment rate and to hours when employed. This definition is robust to the choice of the reference period and we develop a new statistical decomposition that provides bounds on changes at these margins. We focus on longer-run labour supply changes over the period 1977 to 2007 and abstract from the shorter-run impact of recessions. Examining secular changes over this period, we show that both margins matter in explaining changes in total hours. We then provide a detailed analysis across countries and across time by demographic type. Given the large systematic differences we uncover in the importance of these margins by age and gender, it is unlikely that a single explanation will suffice to account for the macroeconomic evolutions in the three countries.     

Demographic change, social security systems, and savings

In theory, improvements in healthy life expectancy should generate increases in the average age of retirement, with little effect on savings rates. In many countries, however, retirement incentives in social security programs prevent retirement ages from keeping pace with changes in life expectancy, leading to an increased need for life-cycle savings. Analyzing a cross-country panel of macroeconomic data, we find that increased longevity raises aggregate savings rates in countries with universal pension coverage and retirement incentives, though the effect disappears in countries with pay-as-you-go systems and high replacement rates.     

我国职工退休年龄影响因素的实证研究

当前我国劳动力逐渐短缺,职工退休年龄直接关系到我国劳动力供给的数量和结构。使用2011年在广东省21个地市的问卷调查数据,研究影响职工退休年龄问题的影响因素。实证研究表明,工资、工龄对职工退休年龄的影响显著为正。养老金对男职工退休年龄的影响显著为负。机关事业单位职工的退休年龄更晚。教育年限对女职工的影响显著为正。已婚、...     

Demographic Change and Pension Reform in Spain: An Assessment in a Two‐Earner,OLG Model*

Recent pension reforms in Spain have been guided by two opposite goals: achieving financial stability and improving redistributive aspirations. In particular, reforms implemented in 1997/2001 entailed a mixture of both through: (i) changes in the pension formula; (ii) the extension of entitlement to early retirement to all cohorts; and (iii) increases in survival pensions. This paper builds an applied general equilibrium OLG model that captures the fundamental non‐stationarity of the Spanish reality (ageing population, education transition and increasing female attachment to the labour market) to assess the impact of those reforms. As a novel feature with respect to the literature, households in our model economy are made up of two potential earners who make saving and labour supply decisions. Our main conclusions from the analysis are at three different levels. First, the Spanish pension system is clearly unsustainable, with pension expenditure reaching a figure of about 18 per cent of GDP in 2050, and the reforms have clearly been     

Optimal retirement time under habit persistence: what makes individuals retire early?

As the effective labor market exit observed in most OECD countries is lower than the corresponding official retirement age, the question concerning the driving factors for an early retirement decision arises. This paper incorporates the optimal retirement decision in an optimal consumption and asset allocation problem in order to analyze, among others, the effect of habit forming preferences and diverse leisure preferences for earlier retirement. We compare two possible situations for the retirement phase: (a) the individual is allowed to freely consume and invest; (b) he annuitizes his wealth at retirement and consumes the annuity income. We find that early retirement is optimal if leisure gain through earlier retirement is highly appreciated or the standard of living (habit level) is low. Additionally, our numerical results show that high initial wealth or low labor income lead to early retirement, confirming observations of Fields & Mitchell.     

渐进式差异化退休年龄的决定机制、经验借鉴与政策建议

退休年龄本质上是劳动者在职期间的劳动贡献与退休后所享福利之间的均衡。公平、合理、科学的确定退休年龄,对劳动者在生命周期不同阶段(在职期间与退休之后)的福利具有十分重要的影响。借鉴我国台湾地区经验,结合大陆实际,以工作年限为基础,采用渐进式、差异化的退休年龄政策,即采取"95(99)=标准退休年龄+工作年限"的思路,在"95制"、"96制"、"97制"、"98制"和"99制"五个方案进行优选渐进,对不同类型劳动者(工种、受教育程度、性别等)应采取差异化的退休年龄政策。     

The future of the elderly

Between now and the 1990s the population of most Western European countries will, on present fertility and mortality rates, show little increase. However, the proportion aged 65 or more will increase; this will be almost entirely due to the 20–25% increase in the numbers aged 75 or more. At the same time there will be pressure to lower the retirement age so as to avoid unemployment among the young. Schemes to encourage early retirement have had little success; without considerable economic growth the conflict between the interests of the elderly and the young will inevitably become more acute.     

The Double Dividend of Postponing Retirement

Early retirement seems to plague social security systems in a number of European countries. In this paper we argue that delaying retirement may have two positive effects: it is likely to partially restore the financial balance of the system, and it may foster redistribution among retirees. To obtain such a double dividend, the benefit rule of the initial social security scheme must have the following two characteristics. First, it operates redistribution within generations. Second, it is biased and induces early retirement.     

Fiscal sustainability and demographic change: a micro-approach for 27 EU countries

The effect of demographic change on the labor force and on fiscal revenues is topical in light of potential pension shortfalls. This paper evaluates the effect of demographic changes between 2010 and 2030 on labor force participation and government budgets in the EU-27. Our analysis involves the incorporation of population projections, and an explicit modeling of the supply and demand side of the labor market. Our approach overcomes key shortcomings of most existing studies that focus only on labor supply when assessing the effects of policy reforms. Ignoring wage reactions greatly understates the increase in fiscal revenues, suggesting that fiscal strain from demographic change might be less severe than currently perceived. Beyond, our micro-based approach captures the impact on fiscal revenues more accurately than previous studies. Finally, as a policy response to demographic change and worsening fiscal budgets, we simulate the increase in the statutory retirement age. Our policy simulations confirm that raising the statutory retirement age can balance fiscal budgets in the long run.     

论资产弃置会计的国际比较

本文首先说明了资产弃置费用概念,然后分别阐述了不同国家和组织对资产弃置费用处理的会计规定和处理方法,并对其进行了理论性总结,认为它是对传统会计处理方式的一种扩展。作为环境会计的一项重要核算内容,它涉及环境负债、长期资产、折旧与新增费用的组合处理,并采用未来不确定估计方式计量环境负债金额,具有较大的创新。对此,论文还提出了构建我国资产弃置费用会计准则的建议。     

Accounting and the construction of the retired person

This paper seeks to describe the constitutive role played by accounting in the social safety net for the elderly, and its effects on the individual preparing for retirement. The paper documents the effects of accounting on life-long behaviours, through the objectivization of the individual as a worker, saver, and pensioner. It shows how accounting has, by capturing measures of individual earnings, by enlisting the individual in the preparation of tax returns, and by reflecting back to the individual various accumulations of lifetime savings, attempted to transform that individual not just into a saver who can continue to consume long after ceasing to produce, but into an investor whose interests are aligned with the financial markets. The focus of the paper is the Canadian retirement income system. Starting with an early attempt at retirement income protection, the 1908 government annuities program, the paper develops a genealogy of Canada’s present comprehensive retirement income system. By examining the succession and accumulation of retirement income programs introduced since 1908, the study shows how accounting has functioned as a dividing practice, separating citizens into categories wherein they can be subjected to particular programs. The paper suggests that the accounting technologies used in constructing the Canadian system have fallen short as tools for governing retirement and retirement savings, largely due to their inadequacy as technologies of the self. The paper is of particular relevance to accounting scholars because the aging population in many countries is putting tremendous pressure on retirement income programs. The paper helps us to understanding the role of accounting in shaping political policy on the aged and in preparing citizens for old age.     

Aging and Retirement: Evidence Across Countries

How do demographic factors influence retirement? Using a large cross-country data set, I show that in countries with a larger share of elderly in their population the length of retirement is longer. This result holds true if I control for wealth effects, and when the effective labor force participation rate of the elderly is used instead of the official retirement age. Retirement policies and the social security size are strictly related: a new variable, representing the aggregate relevance of retirement policies, turns out to be significant in explaining the size of social security. Finally, the total amount of social security transfers is positively related with the increase of the elderly population, while in per capita terms this relation is not significant.     

An Individual’s Chosen Retirement Age: When is the Economically Feasible Retirement Age Chosen over the Anchor Provided by Known Others?

Abstract

Do individuals make rational, well-planned retirement age decisions? Evidence is not conclusive; some decisions seem to be quite reasonable, while others, including the long-term trends generated by these decisions, seem irrational. In order to be able to predict and influence these important decisions, the process leading up to making them needs to be better understood. The process an individual uses to make a retirement decision may be influenced by a rational allocation of money, time, and effort, as suggested by a utility-maximizing Household Production approach. Alternately, the decision process may be strongly influenced by an anchor, defined by the retirement ages chosen by friends, neighbors, relatives, and colleagues, as suggested by Anchoring and Prospect Theory. Studies investigating anchoring and risk-seeking or risk-aversion behavior, which results when a target is seen as a loss or a gain from the anchor, have found that individuals make irrational decisions under many different circumstances. A set of retirement decision propositions, which hypothesize that the heuristic of Anchoring and the resulting cognitive biases described by Prospect Theory will influence the chosen retirement age, are developed in this paper. Retirement information provided by the employer is a possible moderator that may reduce the influence of the anchor on the retirement decision; a set of moderator hypotheses are also developed in this paper. Propositions strongly supported by existing research predict that, unless sufficient information regarding retirement issues is used by an individual, he or she is likely to choose an inappropriate retirement age.     

The Impact of DC Pension Systems on Population Dynamics

Abstract

This study investigates the risk inherent in defined contribution (DC) pension plans on an individual and aggregate basis, based on U.S. data. Our aim is to gain insight into the consequences of a DC pension scheme becoming the predominant pillar of retirement income for an entire society. Using the stochastic simulated output of a DC flexible age-of-retirement model, we first determine the optimal investment strategies. We then examine the demographic retirement dynamics of an entire population of DC pension plan participants.

We observe that even for the most risk-averse plan members there is a high level of uncertainty in an individual’s age at retirement. At the aggregate population level, we find that this uncertainty does not get dampened to any great extent by a diversification effect. Instead, the central role played by the market in determining retirement dates results in significant variation in the dependency ratio (the ratio of retirees to workers) over time. In addition, an attempt to ameliorate the outcome by introducing additional realistic features in the DC population modeling did little to dampen this volatility, which suggests that countries dominated by DC schemes of this type may, over time, be exposed to significant risk in the size of its labor force.