The impact of bequest motives on labor supply and retirement behavior in Japan: A theoretical and empirical analysis

Do individuals who want to leave a bequest work more and retire later than other individuals? Does the reason for wanting to leave a bequest (altruism vs. exchange) matter? In this paper, we conduct a theoretical and empirical analysis of the impact of bequest motives on the labor supply and retirement behavior of households in Japan, and to the best of our knowledge, it is virtually the first paper to do so. We conduct an empirical analysis using micro data from a unique survey—the Preference Parameters Study of Osaka University—and show that respondents with an altruistic or strategic/exchange bequest motive work more at the intensive margin than those without any bequest motive but that respondents with a strategic or exchange bequest motive work less at the extensive margin (i.e., retire earlier) than those without any bequest motive. Our findings for the strategic or exchange motive suggest that respondents with such a motive tend to work more than others before they retire so that they can earn more, leave a larger bequest to their children, and elicit more care from them but that they tend to retire earlier than others so that they can start receiving care for themselves and their spouses from their children sooner. Our findings have important policy implications because they imply that inheritance taxes may affect people's labor supply and retirement behavior by influencing the strength of their bequest motives and that these effects may differ by the type of bequest motive.     

Does family planning help the employment of women? The case of India

This paper gives some insight into the existence of a positive effect of family planning programmes on women's employment in developing countries. We study married women aged 15–49 living throughout India using a sample drawn from the National Health Family Survey (NFHS-2) for 1998–1999. We focus on a programme of doorstep services delivered by health or family planning (FP) workers who are sent to visit women in their assigned areas. Results derived from the estimation of fixed effect linear probability and conditional logit models show a positive and significant correlation of the share of women living in a local area (village, town or city) that has been visited by FP workers with the probability of women's employment. A multinomial analysis also shows that the largest positive effect of FP in rural India is to be found on paid work, as opposed to unpaid work, suggesting a potential empowering feedback of demographic measures through labour earnings.     

Retirement policy,employment status,and gender pay gap in urban China

China’s current retirement policy has been in effect since 1978. The legal retirement age is 50 years for female workers, 55 years for female cadres, and 60 years for male cadres and workers; women can retire 5 or 10 years earlier than men. This difference in legal retirement age may affect wage growth in those approaching retirement. Based on China’s Urban Household Survey data set, this study investigated the influence of retirement age differences on the gender pay gap. From age 30 to 49 years, the wage difference between female workers and cadres increased by approximately 15 % more than that of men. After consideration of possible endogeneity problems and demonstration of the robustness of the regression results, the study determined that such differences were likely caused by gender and identity differences at retirement age. Among workers and cadres, the retirement age policy exacerbated gender differences in wages through working hours, wage rate, career promotion, and job change activity in those approaching retirement.     

Incomplete property rights, exposure to markets and the provision of environmental services in China

This paper uses data from a 2003 rural survey to examine the determinants of household provision of environmental services under China's Sloping Land Conversion Program (SLCP), the largest payments for environmental services program in the developing world. The paper examines the determinants of plot-level survival rates of program-planted trees and grasses. It finds that household rights over retired land as well as autonomy in program decision-making (which we argue on the basis of supportive evidence are plausibly exogenous to post-retirement outcomes) have important and potentially countervailing impacts on the provision of environmental services targeted by the program. Households permitted to select what to plant obtain better program outcomes, but do not make the choices that the government would like them to, while those permitted to decide what land to retire perform worse. The analysis also finds that households more vested and experienced in agriculture and with less exposure to off-farm labor markets fare better in managing their planted trees. Significant learning-by-doing effects are also evident, suggesting that greater technical support to farmers could improve outcomes and lower program costs.     

Non-financial Determinants of Retirement: A Literature Review

Retirement is often concentrated at specific ages—in particular the ‘normal retirement age’ and an ‘early retirement age’. Financial incentives cannot fully explain this. Moreover, the participation effect of a higher normal retirement age importantly exceeds the encompassing income effect. Based on a literature survey, we conclude that social norms, default options, and reference-dependent utility are likely explanations for the individual propensity to retire at specific retirement ages. Further empirical research on non-financial determinants of retirement is needed to fully understand individual retirement behavior.     

Was Malthus right? The relationship between population and real wages in Italian history, 1320 to 1870

In this article we investigate the relation between population and real wages in the Italian economy during the period 1320–1870. The main result is that the positive check is strong and statistically significant but the other equilibrating mechanism in the Malthusian model – the preventive check – based on the positive relationship between fertility and real wages does not operate in pre-industrial Italy. In contrast to the Malthusian hypothesis, we find a negative feedback from wage to population. The empirical result is clearly consistent with the theoretical framework of the “old age security motive”. We show, with a simple overlapping-generation model, that by allowing for substitution in a pre-industrial economy between child quantity and other assets (such as new seeds, better soybean quality, and new cultivation and irrigation methods) fertility may be negatively affected whenever income rises.     

Socioeconomic status in childhood and health after age 70: A new longitudinal analysis for the U.S., 1895–2005

The link between circumstances faced by individuals early in life (including those encountered in utero) and later life outcomes has been of increasing interest since the work of Barker in the 1970s on birth weight and adult disease. We provide such a life course perspective for the U.S. by following 45,000 individuals from the household where they resided before age 5 until their death and analyzing the link between the characteristics of their childhood environment – particularly, its socioeconomic status – and their longevity and specific cause of death. White U.S.-born males living before age 5 in lower SES households (measured by father's occupation and family home ownership) who survive to age 70 die younger and are more likely to die from heart disease than those living before age 5 in higher SES households. The pathways potentially generating these effects are discussed.     

延迟法定退休年龄的必要性分析

我国法定退休年龄偏低,职工缴纳养老保险费的年限偏短,而领取养老保险金年限偏长,一方面,引起赡养率上升,统筹养老保险基金入不敷出;另一方面,随着预期寿命的延长,退休职工人平均寿命将超出10年,个人账户面临长寿者支付风险。因此,延迟法定退休年龄成为改革的必然。借鉴国外做法,结合国情,建议我国应尽快延迟法定退休年龄,实行浮动退休制度。     

Entrepreneurship and business culture in Japan and the U.S.

It seems to me likely that entrepreneurship will take a different path in Japan than it has in the U.S. Given the prominence of large organizations in key areas of Japan's economy and the emphasis its society places on lifetime employment relationships, many of the “startups” of the sort that transformed the American business are more likely to happen within existing firms rather than as new enterprises. Such development, called “intrapreneurship” in the U.S. requires new institutional structures and rewards. Such changes will not come easily, because they run against the grain of Japanese society and business culture, yet I believe that success will come to those who can execute such strategies.     

Asset or burden? Impact of children on parents’ retirement

If parents receive financial support in retirement from their children, having more children with higher earning power may expedite their retirement. On the other hand, retirement may be delayed if parents are burdened with educational expenses for children. We empirically investigate how the quantity and the education of children influence their parents’ retirement decisions. Due to the endogeneity of childrearing in the retirement decision, we employ the instrumental variable method with twin births and child deaths as instruments. We find that parents retire earlier when they have more children and better educated children and they receive a significant amount of transfers from children.     

Migration constraints and development: Hukou and capital accumulation in China

Rural–urban migration flows are a crucial corollary of economic development. The adverse or beneficial effects of internal migration, for sending as well as receiving areas, and the definition of optimal migration policies, have remained much discussed issues since the seminal works of Harris and Todaro (1970). This debate is especially acute in China where the “household registration system” (hukou) acts as a strong constraint on individual migration. This paper aims to assess the consequences of hukou through a simple model of a developing dual economy with overlapping generations. Contrary to existing studies focused on the contemporaneous allocation of economic resources, it deals with the dynamic consequences of migration flows and migration policies. It shows that, in fairly general circumstances, hukou-related migration constraints can actually hasten development, understood as the transfer of the labor force to the modern sector, driven by capital accumulation. The hukou system could thus be one of the causes of the extremely high Chinese saving rate and of the high pace of Chinese development. Insights from the model are confronted with stylized facts from the Chinese development, and theoretical results are especially consistent with the effects of the 2001 “towns and small cities” reform.     

Bank market power, economic growth and financial stability: Evidence from Asian banks

This paper examines whether Asian banks are still prone to moral hazard in the aftermath of the 1997 Asian crisis. Using a sample of commercial banks from 12 Asian countries during the 2001–2007 period, our empirical findings highlight that greater market power in the banking market results in higher instability. Although banks are better capitalized in less competitive markets their default risk remains higher. A deeper investigation however shows that such behaviour is dependent on the economic environment. Higher economic growth contributes to neutralize greater risk taking and higher instability in less competitive markets.     

The impact of retirement on household consumption in Japan

Using monthly data from the Japanese Family Income and Expenditure Survey, we examine the impact of retirement on household consumption. We find little evidence of an immediate change in consumption at retirement, on average, in Japan. However, we find a decrease in consumption at retirement for low income households that is concentrated in food and work-related consumption. The availability of substantial retirement bonuses to a large share of Japanese retirees may help smooth consumption at retirement. We find that those households that are more likely to receive such bonuses experience a short-run consumption increase at retirement. However, among households that are less likely to receive a retirement bonus, we find that consumption decreases at retirement.     

The Western European marriage pattern and economic development

For several centuries before the First World War women's age at first marriage in the west of Europe was higher than in the east (and in the rest of the world). In their low mortality regimes Western Europeans chose lower fertility in part through a higher female age at marriage. This allowed women to increase their human capital both formally and informally in the years before child bearing so that more informed mothers brought up better educated offspring. The demographic pattern influenced the stock of human capital and directly contributed to Western Europe's development advantage. The predicted relations of this economic model of the household are tested with two datasets, one at the county level for England for the second half of the nineteenth century and the other at the national level for Europe 1870–1910.     

Early Retirement Behaviour in the Netherlands: Evidence From a Policy Reform

In the early 1990s the Dutch labour unions and employer organisations agreed to transform the generous and actuarially unfair early retirement (ER) schemes into less generous and actuarially fair schemes that reward individuals for postponing retirement. The starting dates of these new ER programs varied by industry sector. In this study, we exploit this variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989–2000, to estimate hazard rate models for the retirement age. We conclude that the policy reform has indeed induced workers to postpone retirement. Both the wealth effect (lower ER wealth) and the substitution effect (lower implicit taxes on retirement postponement) are significant, the latter being more substantial.     

Can Simple Informational Nudges Increase Employee Participation in a 401(k) Plan?

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 nonparticipants 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.     

How Sensitive are Individual Retirement Expectations to Raising the Retirement Age?

This paper investigates the causal effects of the announcement of an increase in the statutory pension age on employee retirement expectations. In June 2010, the Dutch government signed a new pension agreement with the employer and employee organizations that entailed an increase in the statutory pension age from 65 currently to 66 in 2020 for all inhabitants born after 1954. Given the expected increase in average life expectancy, it was also decided that in 2025 the pension age would be further increased to 67 for those born after 1959. This new pension agreement received huge media coverage. Using representative matched administrative and survey data of public sector employees, we find that the proposed policy reform increased the expected retirement age by 3.6 months for employees born between 1954 and 1959 and by 10.8 months for those born after 1959. This increase is reflected in a clear shift in the retirement peak from age 65 to ages 66 and 67 for the respective treated cohorts. Men respond less strongly to the policy reform than women, but within couples we find no evidence that the retirement expectations of one spouse are affected by an increase in the statutory pension age of the other. Furthermore, we show that treatment effects are largely driven by highly educated individuals but are lower for employees whose job involves physically demanding tasks or managerial and supervisory tasks.     

The health cost of living in a city: The case of France at the end of the 19th century

Despite a long standing debate over urban living conditions during industrialization, the impact of rural–urban migrations on health and mortality remains an open question. We observe both mortality and geographical mobility in a large longitudinal dataset of French males and show that rural–urban migrants benefited from clear advantages over those who already lived in the city. However, this benefit fades in a few years. Further we find no evidence of a spike in mortality among rural migrants as they encountered the more severe disease environment of cities, instead it seems their initially superior physical human capital was depleted over time.     

Retirement Incentives in Belgium: Estimations and Simulations Using SHARE Data

The paper studies retirement behavior of wage-earners in Belgium—for the first time using a rich survey dataset to analyze retirement incentives as faced by individuals. Specifically, we use SHARE data to estimate a model à la Stock and Wise (Econom Econ Soc 58(5):1151–1180, 1990). Exploring the data on individual life-histories from SHARELIFE, we construct a measure of financial incentive to retire. Our analysis explicitly takes into account the different take-up rates of the various early retirement exit paths across time and ages. The results show that financial incentives play a strong role. Health and education also matter, as do regional differences. Against the general background of the 2020 strategy, we perform a set of policy simulations and illustrate the scope but also the limits associated with selective parametric reforms.