Social Security reform with heterogeneous mortality

Jones, John Bailey; Li, Yue

doi:10.1016/j.red.2022.06.003

Cited by 13 publications

(7 citation statements)

References 66 publications

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“…Methodologically, we relate to structural studies with endogenous retirement and claiming decisions. A natural application for this type of models is to study various aspects of Social Security reforms (e.g., Jones and Li, 2018, 2022). In another two interesting applications, French and Jones (2011) study the relative effects of Medicare versus Social Security eligibility ages on labor supply decisions, whereas Keane and Wasi (2016) examine the labor supply elasticities over the life‐cycle.…”

Section: Literature Reviewmentioning

confidence: 99%

Accounting for Social Security Claiming Behavior

Pashchenko

Porapakkarm

2023

Int Economic Review

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We study why Social Security benefit claiming is concentrated at two ages, 62 and the full retirement age, and provide three main findings. First, we show that claiming behavior can be well explained by a parsimonious life‐cycle model with fully rational agents. The two key mechanisms are (i) the strong unwillingness to hold annuities, (ii) the effects of the earnings test. Second, we show that current rules distort claiming and labor supply decisions, and eliminating these distortions results in large welfare gains. Finally, we show that claiming decisions can be used to sharpen the identification of important preference parameters.This article is protected by copyright. All rights reserved

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Section: Literature Reviewmentioning

confidence: 99%

Accounting for Social Security Claiming Behavior

Pashchenko

Porapakkarm

2023

Int Economic Review

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“…until agents decide to stop working at age j R and receive retirement benefits. We abstract from temporary retirement and from separating the decisions of benefit claiming and labor market exit as in İmrohoroğlu and Kitao (2012) or Jones and Li (2023). As already discussed above, OAP claiming typically happens during employment, and although there are only a few restrictions there is hardly any full-time work after retirement.…”

Section: Accumulation Of Pension Wealth and Benefit Calculationmentioning

confidence: 99%

“…All these studies abstract from disability risk and DP pensions. These features are considered by Díaz-Giménez and Díaz-Saavedra (2009), Erosa et al (2012), Fehr et al (2013), Kitao (2014), or Jones and Li (2023), who study retirement in models with earnings uncertainty and disability risk. However, DP retirement is treated there as a pure exogenous process without an individual application decision and application process.…”

Section: Introductionmentioning

confidence: 99%

Optimal retirement with disability pensions

Fehr,

Fröhlich

2023

Journal of Pension Economics and Finance

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This paper develops a general equilibrium life-cycle model with endogenous retirement that focuses on the interplay between old-age pensions (OAP) and disability pensions (DP) in Germany. Germany has introduced a phased-in increase of the normal retirement age from age 65 to 67 (Reform 2007) and closed off other routes to early OAP retirement. This reform was followed by a phased-in expansion of future DP benefits (Reform 2018). Our simulation results indicate that the first reform will induce a shift toward DP retirement, while the Reform 2018 will even neutralize the financial and economic gains of the Reform 2007 if current DP eligibility and benefit rules remain unchanged. We therefore highlight the increased relevance of DP when reforming the retirement system and retirement incentives in an aging society. Securing the financial stability of public pensions requires activation and rehabilitation of sick elderly in the workforce and tight access to disability benefits.

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“…This implies the necessity of implementing a model with more than one degree of heterogeneity. The models of , Fehr and Uhde (2013), Fehr and Uhde (2014), Laun et al (2019), and more recently Jones and Li (2023), in which agents face idiosyncratic income risk, disability risk, and mortality risk by the skill group, and the distribution of skill groups is the same across cohorts, are potential candidates. However, in reality, education is changing across birth cohorts, which may cause that the observed increasing gap in life expectancy by educational attainment is just driven by the fact that the low-educated group becomes more negatively selected over time (Goldring et al, 2016;Hendi et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Redistributive effects of pension reforms: who are the winners and losers?

Sánchez-Romero,

Schuster,

Prskawetz

2023

Journal of Pension Economics and Finance

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As the heterogeneity in life expectancy by socioeconomic status increases, many pension systems imply a wealth transfer from short- to long-lived individuals. Various pension reforms aim to reduce inequalities that are caused by ex-ante differences in life expectancy. However, these pension reforms may induce redistribution effects. We introduce a dynamic general equilibrium-overlapping generations model with heterogeneous individuals that differ in their education, labor supply, lifetime income, and life expectancy. Within this framework we study six different pension reforms that foster the sustainability of the pension system and aim to account for heterogeneous life expectancy. Our results highlight that pension reforms have to be evaluated at various dimensions. Reforms that may increase the sustainability of the pension system are not necessarily conducive to reduce the redistributive wealth transfers from short- to long-lived individuals. Our paper emphasizes the need for studying pension reforms in models with behavioral feedback and heterogeneous socioeconomic groups.

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Social Security reform with heterogeneous mortality

Cited by 13 publications

References 66 publications

Accounting for Social Security Claiming Behavior

Accounting for Social Security Claiming Behavior

Optimal retirement with disability pensions

Redistributive effects of pension reforms: who are the winners and losers?

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