Monday, November 19, 2018

New papers from the NBER

A Lifetime of Changes: State Pensions and Work Incentives at Older Ages in the UK, 1948-2018
James Banks and Carl Emmerson #25261
We describe the history of state pension policy in the UK since 1948 and calculate summary measures of the generosity of the system over time and the degree to which the it created implicit taxes on, or subsidies to, work at older ages. The time series of these measures, calculated separately for ’example-type’ individuals of different birth cohorts, education and sexes, are then related to the time-series of employment rates at older ages for the equivalent types of individual. The generosity of the system rose over the period as whole but has fallen in recent years, and in contrast to many countries there were generally never large implicit taxes on work arising from the state pension system. What implicit subsidies there were in the years immediately before the State Pension Age have been gradually eliminated and the system is now broadly neutral with regard to work incentives. Exploiting variation in pension wealth and work incentives across different cohort-educatio! n-sex groups, created by the timing and phasing of pension reforms, we show that both pension wealth and the implicit work disincentives in the pension system are correlated with employment outcomes for men, with the expected negative sign.

Social Security Programs and Retirement Around the World: Reforms and Retirement Incentives – Introduction and Summary
Axel H. Börsch-Supan and Courtney Coile #25280
This is the introduction and summary to the ninth phase of an ongoing project on Social Security Programs and Retirement Around the World. This project, which compares the experiences of a dozen developed countries, was launched in the mid 1990s, following decades of decline in the labor force participation rate of older men. The first several phases of the project document that social security program provisions can create powerful incentives for retirement that are strongly correlated with the labor force behavior of older workers. Subsequent phases have explored how disability program provisions affect retirement, whether there is a link between older employment and youth unemployment, and whether older individuals are healthy enough to work longer. In the two decades since the project began, the dramatic decline in men’s labor force participation has been replaced by sharply rising participation rates. Older women’s participation has increased dramatically as well. Over this same period, countries have undertaken numerous reforms of their social security programs, disability programs, and other public benefit programs available to older workers. In this ninth phase of the project, we explore how the financial incentive to work at older ages has evolved from 1980 to the present. We highlight the important role of reforms in these changing incentives and examine how changing incentives may have affected retirement behavior.

The Evolution of Retirement Incentives in the U.S.
Courtney Coile #25281
Employment rates of older men and women in the U.S. have been rising for the past several decades. Over the same period, there have been significant changes in Social Security and private pensions, which may have contributed to this trend. In this study, we examine how the financial incentive to work at older ages has evolved since 1980 as a result of changes in Social Security and private pensions. We find that the implicit tax on work after age 65 has dropped by about 15 percentage points for a typical worker as a result of Social Security reforms; incorporating the change in private pensions, the decline is larger. We provide suggestive evidence that the evolution of retirement incentives has affected retirement behavior.

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Tuesday, November 13, 2018

New papers from the National Bureau of Economic Research

Social Security Programs and the Elderly Employment in Japan
by Takashi Oshio, Akiko S. Oishi, Satoshi Shimizutani  -  #25243 (AG)

We examine how the change in the trend of the elderly's
employment rates has been associated with changes in incentives
of social security and its related programs in Japan since the
1980s.  We compute the tax force to retire early, using the
institutional parameters and synthetic earnings profiles, and
juxtapose the tax force measures and the elderly employment rates
during 1980 and 2016.  Our results suggest that a reduction in
the tax force to retire early due to a series of social security
reforms has been associated with the recent recovery of the
employment rates for men aged 60 years and over as well as the
increasing upward trend in the employment rates for women aged
55-64 years.

Social Security Programs and Employment at Older Ages in the Netherlands, by Klaas de Vos, Arie Kapteyn, Adriaan Kalwij  -  #25250 (AG)

There have been a vast number of social security reforms aimed at
increasing employment at older ages over the last two decades in
the Netherlands.  These reforms mainly lead to more stringent
eligibility criteria for, and reduced generosity of, social
security programs.  Our empirical evidence suggests that these
reforms are likely to have contributed to individuals working
longer, but it is difficult to pinpoint which reforms have been
most effective.  Furthermore, we show that the recent increase in
the state pension eligibility age is likely to further increase
employment at older ages.

Saving Regret, by Axel H. Boersch-Supan, Tabea Bucher-Koenen, Michael D. Hurd, Susann Rohwedder  -  #25238 (AG LS)

We define saving regret as the wish in hindsight to have saved
more earlier in life.  We measured saving regret and possible
determinants in a survey of a probability sample of those aged
60-79.  We investigate two main causes of saving regret:
procrastination along with other psychological traits, and the
role of shocks, both positive and negative.  We find high levels
of saving regret but relatively little of the variation is
explained by procrastination and psychological factors.  Shocks
such as unemployment, health and divorce explain much more of the
variation.  The results have important implications for
retirement saving policies.

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