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Università degli Studi di Salerno |
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Economics
of Ageing in Europe (AGE)
RTN
European
Program HPRN-CT-2002-00235
[1] Ageing and household saving
[2] Pensions, social security and labour market behaviour
[3] Relation between health and economic resources
[4] Saving and portfolio decisions
[5] Consumption and material living standards of the elderly
[6] Intergenerational transfers and their interaction with state transfers
1. Alessie (Tilburg), Brugiavini (Venice) and Weber (Venice), Household saving and cohabitation, NBER working paper 11079, 2005
2. Alessie (Tilburg), Kapteyn (RAND), Lusardi, Explaining the Wealth Holdings of Different Cohorts: Productivity Growth and Social Security, European Economic Review 49, 1361-81, 2005.
3. Alessie R. (Tilburg), F. Teppa (Venice), (2003), “Saving and Habit Formation: Evidence from Dutch Panel Data,” Tinbergen Institute Discussion Paper 2002-076/3, http://members.chello.nl/~r.j.m.alessie/wp.htm
4. Alessie R. (Tilburg), S. Hochguertel (Tilburg), A. van Soest (RAND), “Ownership of stocks and mutual funds: a panel data analysis,” Review of Economics and Statistics, September 2004.
5. Attanasio (IFS), Browning (CAM), Estimating Euler Equations with Noisy Data: Two Exact GMM Estimators, CAM WP 2005-10.
6. Attanasio O.P. (IFS), A. Brugiavini (Venice), (2003), “Social security and households’ saving,” Quarterly Journal of Economics, vol. 118, n. 3.
7. Banks (IFS), Kapteyn (RAND), Smith (RAND), van Soest (Tilburg), Work Disability is a Pain in England, The Netherlands, and the United States, mimeo, 2005.
8. Banks, J. (IFS), A. Kapteyn (RAND), J. Smith (RAND), A. van Soest (RAND), International comparisons of work disability, CentER Discussion Papers 2004, 36.
9. Banks, J., R. Blundell (IFS), J. Smith (RAND), Z. Smith (IFS), (2003) “Housing Wealth over the Life-Cycle in the Presence of Housing Price Volatility,” mimeo, May 2003.
10. Börsch-Supan (MEA), Brugiavini (Venice), Jürges (MEA), Mackenbach, Siegrist, Weber (Venice), Health, Ageing and Retirement in Europe – First Results from the Survey of Health, Ageing and Retirement in Europe. Mannheim: MEA, 2005.
11. Börsch-Supan (MEA), Euwals (Tilburg), Eymann (MEA), Who determines household savings for old Age? Evidence from Dutch panel data, Journal of Economic Psychology, Vol. 25, Issue 2, 195-211, 2004.
12. Bottazzi (IFS), Jappelli (Salerno), Padula (Salerno), Retirement Expectations, Pension Reforms and Their Effect on Private Wealth Accumulation, CEPR Discussion Papers n. 4882, 2005, http://ideas.repec.org/p/cpr/ceprdp/4882.html
13. Bourguignon, F. (DELTA), M.C. Chiuri (Salerno), “Labour market time and home production: a new test for collective models of intra-household allocation,” mimeo, September 2003.
14. Brugiavini A. (Venice), M. Padula (Salerno), (2003), “Household Savings in Italy (2003),” in Börsch-Supan, A. (ed.), Life Cycle Saving and Public Policy. New York: Academic Press, p. 101-147.
15. Christelis (Young Researcher Salerno) and Weber (Venice), Expected Bequest and Current Wealth in SHARE, mimeo, 2005.
16. Grant, C., C. Koulovatianos (Cyprus), A. Michaelides, M. Padula (Salerno), “Redistributive Policies through Taxation: Theory and Evidence,” CSEF Working Paper n. 100/2003, http://www.csef.it//WP/wp100.pdf
17. Guiso L. (Ente Einaudi), M. Haliassos (Cyprus), T. Jappelli (Salerno), “Household Stockholding in Europe: Where Do We Stand, Where Do We Go?”, Economic Policy, April 2003, 117-164.
18. Guiso L. (Ente Einaudi), T. Jappelli (Salerno), Awareness and stock market participation, CSEF Working Paper n. 110/2004, June 2004, http://www.csef.it//WP/wp90.pdf.
19. Jappelli, T. (Salerno), L. Pistaferri, G. Weber (Venice), “Health care quality and economic inequality,” CSEF Working Paper n. 120/2004, June 2004, http://www.csef.it//WP/wp120.pdf
20. Jappelli, T., M. Padula (Salerno), R. Bottazzi (IFS), “Retirement expectations and pension reforms,” CSEF WP n. 92/2003, June 2003, http://www.csef.it//WP/wp92.pdf .
21. Kapteyn (RAND), Schonlau (RAND), van Soest (Tilburg), Selection Bias in Web Surveys and the Use of Propensity Scores, 2005.
22. Kapteyn (RAND), Smith (RAND), van Soest (Tilburg), Self-reported Work Disability in the US and The Netherlands, 2005.
23. Michaud (Tilburg), Tatsiramos (Cyprus), Employment Dynamics of Married Women in Europe, IZA WP 1706, RAND Discussion Paper 273, 2005. ftp.iza.org/dps/dp1706.pdf
24. Von Gaudecker (Young Researcher IFS), Wengstroem, van Soest (Tilburg), Preference Heterogeneity and Portfolio Choice, 2005.
1. Alessie
R. (Tilburg), Rouwendal J., “House Prices, Second Mortgages and
Household Savings; An Empirical Investigation for the Netherlands, 1987-1994”,
Tinbergen Institute Discussion Paper no. 74/2002 (http://www.tinbergen.nl/
discussion papers/ 02074.pdf)
Since the beginnings of the eighties house prices in the Netherlands have
increased steadily and considerably. In this paper we study the effect of this
development on the demand for second mortgages and on the savings of Dutch
households. We use the data of the Dutch socioeconomic panel for the years
1987-1994. These data contain self-reported values of the houses of owner-
occupiers, which are shown to correspond to the median sales prices provided by
the Dutch Association of Realtors. Households therefore seem to be well aware of
the increase in the value of their house. We use panel data methods to
investigate the effect of house prices on (i) the number and size of second
mortgages, (ii) the savings of owner-occupiers and (iii) the savings of renters
that may be considered as would-be owners. We find a significant effect of home
equity on the demand for second mortgages. Savings of homeowners decrease when
house prices accelerate. We find no evidence that increased demand for mortgage
loans is caused by substitution from other forms of consumer credit. Contrary to
results reported in the literature, we find no evidence of an increase in
savings of would-be owners caused by higher house prices.
2. Ando,
A., Christelis D. (Young Researcher Salerno), Joong Hyun Kim, “The Drop
in the U.S. Household Saving Rate between 1985 and 2000: an inquiry using the
Consumer Expenditure Survey”, mimeo, University of Salerno.
We investigate the recent drop in the US household saving rate between 1985 and
2000 by disaggregating it into saving by different groups, classified by
demographic or economic variables, and weighted by their frequency in the
population and their position in the income distribution, using data from the
Consumer Expenditure Survey (CEX). We first examine how the CEX compares to the
National Accounts and we find that there are substantial discrepancies, which
lead to contradictory conclusions about the behaviour of the household saving
rate. After adjusting the CEX so that the various expenditure and income items
match the corresponding items in the National Accounts, we find that almost all
groups reduce their saving, and that stock ownership does not affect the saving
rate. The drop in the saving rate in 2000 is mainly due to the dissaving of the
elderly, of the lower income households and of the homeowners.
3. Attanasio (IFS), Banks (IFS), Wakefield (IFS), Effectiveness of tax incentives to boost (retirement) saving, OECD Economic Studies, Special Issue: Tax-favoured retirement saving, No.39, pp.145-172.
4. Banks J., Z. Smith, M. Wakefield (IFS) (2003), ‘Financial wealth and wealth dynamics among the over fifties in Britain, 1995 – 2000’, mimeo, June 2003.
5. Börsch-Supan (MEA), Hank (MEA), Jürges (MEA), New Comprehensive and International View on Ageing: The Survey of Health, Ageing and Retirement in Europe, MEA Working Paper n. 075-05.
6. Börsch-Supan (MEA), Ludwig (MEA), Winter (MEA), Demography, Savings, and Global Capital Markets, In: Center for Financial Studies (Pub.), Capital Markets in the Long Term: Demography, Economic Development and Funded Pension Systems, Frankfurt, 107-126, 2005.
7. Börsch-Supan,
A. (Mannheim), A. Lusardi (2003): Saving: A Cross-National Perspective,
In: Life Cycle Savings and Public Policy, Elsevier Science (USA), 1-31.
http://www.mea.uni-mannheim.de/mea_neu/pages/files/nopage_pubs/iscpw7tb7n5s398t_dp24.pdf
Household saving is still little understood, and even the basic facts – for
instance: How does saving change over the life cycle? Does saving turn negative
in old age? – are controversial. Understanding saving behaviour is not only an
important question of economic theory because the division of income in
consumption and saving concerns one of the most fundamental household decisions,
but it is also of utmost policy relevance. One reason is that private household
saving as a private insurance interacts with social policy as public insurance.
Population ageing and its threat to the sustainability of the public insurance
systems have put the spotlight back on own saving as a device for old-age
provision. Solving the pension crises therefore requires understanding saving.
Another reason is growth: capital accumulation through saving increases economic
growth directly, and indirectly through changes in labour productivity.
8. Börsch-Supan,
A., Essig L. (Mannheim) (2003): Saving in Germany: Results of the first
SAVE study. NBER Working Paper 9902. -
http://papers.nber.org/papers/w9902.pdf
Germany is an interesting country to study saving among older households since
nearly everyone - whether in the middle income bracket or richer - saves
substantial amounts in old age. Only households in the lowest quarter of the
income distribution spend more between the ages of 60 and 75 than they save. Our
paper exploits newly collected data, the first wave of the so-called SAVE panel,
specifically collected to understand economic, psychological and sociological
determinants of saving. Overall, we find extraordinarily stable savings
patterns. More than 40% of German households save regularly a fixed amount.
About 25% of German households plan their savings and have a clearly defined
savings target in mind. Most of German household saving is in the form of
contractual saving, such as saving plans, whole life insurance and building
society contracts. This makes the flow of saving rather unresponsive to economic
fluctuations, such as income shocks. Most households prefer to cut consumption
if ends do not meet. In particular the elderly do not like to use credit cards,
and they eschew debt. We suspect large cohort differences and will study them
once further waves of the SAVE panel will become available.
9. Brugiavini A., Weber G. (Venice), (2003) Household Savings: Concepts and Measurement, in: Börsch-Supan, A. (ed.), Life Cycle Saving and Public Policy, New York: Academic Press, p. 33-54.
10. Buetler
M., F. Teppa (Venice), (2003), “Capital or Annuity: What Retirees Choose,
and What They Should”, mimeo, presented at the RTN meeting in Naples.
We analyse the choice between an annuity and a lump sum capital option upon
retirement within the mandatory Swiss occupational pension system. The data
analysed clearly exhibits an ''acquiescence bias'', meaning that a majority of
retirees chooses the standard option offered by the pensions fund or suggested
by the common practice. However, we also find that those who deviate from the
standard option do so as predicted from theory. The probability of choosing the
capital option shows a U--shaped dependence on total capital at retirement. This
finding can be well explained by a combination of differential mortality,
magnitude effects, insurance aspects, investment opportunities, and the desire
to leave bequests.
11. Christelis (Young Researcher Salerno), Jappelli (Salerno), Padula (Salerno), Wealth and Portfolio Composition, in Axel Börsch-Supan et al. (eds.), Health, Ageing and Retirement in Europe, Mannheim: Mannheim Research Institute for the Economics of Ageing, 2005, http://www.csef.it//WP/wp132.pdf
12. Christelis (Young Researcher Salerno), Jappelli (Salerno), Padula (Salerno), Generated Asset Variables in SHARE Release 1, forthcoming in Jürges et al, Methodological Issues in the Survey of Health, Ageing and Retirement in Europe.
13. Chung, Disney (IFS), Emmerson (IFS), Wakefield (IFS), Public policy and saving for retirement: Evidence from the introduction of Stakeholder Pensions in the UK, 2005. http://www.lse.ac.uk/ubs/events/conf/Disney.pdf
14. Essig (MEA), Household Saving in Germany: Results from SAVE 2001-2003, MEA Working Paper n. 084-05.
15. Essig (MEA), Measures for savings and saving rates in the German SAVE data set, MEA Working Paper n. 086-05.
16. Essig (MEA), Precautionary saving and old-age provisions: Do subjective saving motive measures work? MEA Working Paper n. 084-05.
17. Freyland (MEA), Household Composition and Savings: An Empirical Analysis based on the German SOEP Data, MEA Working Paper n. 088-05.
18. Haile, Meijdam (Tilburg), Inequality, redistribution and growth, CentER Discussion Paper 2004-94, Tilburg University.
19. Jappelli (Salerno), The life-cycle hypothesis, fiscal policy and social security, Banca Nazionale del Lavoro Quarterly Review, forthcoming.
20. Miniaci
R., G. Weber (Venice), (2003) “The Wealth Accumulation of Italian
Households: Evidence from SHAW”, Giornale degli Economisti e Annali di
Economia, 62 (1): 57-91.
In this paper we use a recently released micro data set on characteristics,
behaviour and expectations by Italian households where at least one member is
over 50 years of age. We analyse the way financial and total wealth change with
age of the household head in relation to a number of variables, such as the
reported likelihood of making gifts or leaving bequests, the presence of grown
children within the household or outside it and the type of interactions between
generations, the general health conditions of both head and spouse, household
income and housing tenure. We find that Italian households fail to run down
their financial assets after retirement, but that total wealth does fall in old
age. This is largely due to the decrease in home wealth, and could be attributed
to a mix of cohort effects, depletion of the housing stock and the operation of
Italian inheritance law on surviving spouses. The paper also tackles the
methodological issue of imputing a wealth measure for those households who do
not report their exact holdings of each asset, but provide instead answers to
unfolding brackets questions.
21. Van Groezen, Verbon (Tilburg), Serving the old: Ageing and economic growth, Oxford Economic Papers, forthcoming.
1. Adema (Tilburg), Meijdam (Tilburg), Verbon (Tilburg), The international spillover effects of pension reform, 2005.
2. Alessie (Tilburg), Does social security crowd out private saving?, Peter de Gijsel and Hans Schenk (eds.), Multidisciplinary economics: the birth of a new economics faculty in the Netherlands, Springer, Dordrecht, The Netherlands, 2005, ISBN-10 0-387-26258-X, pp. 367-380.
3. Alessie
R. (Tilburg), Kalwij A., Permanent and Transitory Wage Inequality of
British Men,: Year, Age and Cohort Effects,
http://members.chello.nl/~r.j.m.alessie/wp.htm
We examine the variance-covariance structure of log-wages over time and over the
lifecycle of British men from 1975 to 2001, hereby controlling for cohort
effects. Wage inequality has risen sharply during the 1980’s and early 1990’s
and remained fairly constant in the second half of the 1990’s. We show that this
increase is caused mainly by a strong increase in transitory wage inequality and
only to a lesser extent to an increase in permanent wage inequality. The
transitory component of log-wages is, however, highly persistent over time:
serial correlation decreases from 0.88 over a one-year period to 0.65 over a
ten-year period. The constant wage inequality in the second half of the 1990’s
is attributed to a slight decrease in permanent wages inequality, a
stabilization of the variance of the transitory wage shock, and the strong
decrease in transitory wage inequality for the cohorts entering employment since
the end of the 1980’s. Ignoring age effects in transitory wage inequality and
cohort effects, as is commonly done, leads to severely distorted inferences
concerning the changes in permanent wage inequality
4. Alessie
R. (Tilburg), Mastrogiacomo M., Lindeboom M., “Retirement Behaviour of
Dutch Elderly Households: Diversity in Retirement Patterns across Different
Household Types”, Tinbergen Institute Discussion Paper no. 73/2002 (http://www.tinbergen.nl/discussionpapers/02073.pdf)
This paper aims to assess the relative importance of differences in behavioural
responses to financial incentives in explaining the observed variation in
retirement behaviour across different types of households. We specify and
estimate models for singles and married couples and estimate these on data from
the Dutch Socio-Economic Panel. Model estimates are used to decompose the
observed differences in retirement trends of the different demographic subgroups
into differences in preferences and differences in the availability and
generosity of the retirement options.
5. Banks (IFS), Blundell (IFS), Emmerson (IFS), The balance between DB, DC and State provision, Journal of the European Economic Association, 3, 2-3, 466-476, 2005.
6. Banks (IFS), Emmerson (IFS) Preparing for retirement: the pension arrangements and retirement expectations of those approaching state pension age in England, IFS Working Papers, W05/13.
7. Banks (IFS), Emmerson (IFS), Tetlow, Estimating pension wealth of ELSA respondents, IFS Working Paper W05/09.
8. Banks J., R. Blundell, R. Disney, C. Emmerson (IFS), ‘Retirement, pensions and the adequacy of saving: A guide to the debate’, IFS briefing note 29 - http://www.ifs.org.uk/pensions/bn29.pdf
9. Banks, (IFS), Blundell (IFS), Private pension arrangements and retirement in Britain, Fiscal Studies, 26(1), March 2005, 35-53.
10. Belloni
M., M. Borella, E. Fornero (Venice), (2003) “Changes in Retirement
Behaviour of the Older Workers in Italy”, forthcoming in Elsa Fornero and Paolo
Sestito (eds) "Pension Systems: Beyond Mandatory Retirement", Cheltenham: Edward
Elgar.
As in most countries, the participation rates of the elderly in Italy have
strongly declined during the last decades. Occurring simultaneously with a
marked ageing of the population, this trend has both increased the scope for
pension reforms and reduced their effects, causing much concern among policy
makers. Understanding the main factors behind it, is thus preliminary to
policies directed at increasing participation rates among the elderly. Given
this background, the research project aims at analysing, possibly within a
unified framework: different paths towards retirement; the role of demand
restrictions on the work of the elderly (i.e. restructuring of firms, industrial
sectors and regions). The role of personal choices, given the earning profiles,
and the incentives and constraints built in the pension system (the level of
benefits and the eligibility structure). In the present paper we focus on the
third aspect, i.e. retirement behaviour of older workers in the period
1985-2000. Rather radical social security reforms have taken place in Italy
during the Nineties; the phasing in of the reforms is however very gradual,
involving a long transition period. Particular care is thus required in order to
discriminate between pre-reform, transitional and post-reform behaviour.
11. Berkel (MEA), Börsch-Supan (MEA), Patterns of retirement in Germany: how they emerged, and how to change them, in Fornero, Sestito (eds.), Pension systems - Beyond mandatory retirement, Edward Elgar, Massachusetts, 81-106, 2005.
12. Berkel (MEA), Börsch-Supan (MEA), Pension Reform in Germany: The Impact on Retirement Decisions, Finanzarchiv, Vol. 60, No. 3, 393-421, 2004.
13. Boeri, Börsch-Supan (MEA), Tabellini, How would you like to Reform Your Pension System? The Opinions of German and Italian Citizens, In: Brooks, Razin (eds.), The Politics and Finance of Social Security Reform, Cambridge University Press, Cambridge, 2004.
14. Börsch-Supan (MEA), Essig (MEA), Personal assets and pension reform: How well prepared are the Germans?, MEA Working Paper n. 085-05.
15. Börsch-Supan (MEA), Kohnz, Mastrobuoni, Schnabel (MEA), Micro-Modeling of Retirement Decisions in Germany, In: Gruber, Wise (eds.), Social Security Programs and Retirement Around the World, The University of Chicago Press, Chicago, S. 285-343, 2004.
16. Börsch-Supan (MEA), Köke, Winter (MEA), Pension reform, saving behaviour, and capital market performance, Journal of Pension Economics and Finance, Vol. 4, No. 1, 87-107, 2005.
17. Börsch-Supan (MEA), Ludwig (MEA), Reil-Held (MEA), Projection methods and scenarios for public and private pension information, MEA Working Paper n. 068-05.
18. Börsch-Supan (MEA), The 2005 Pension Reform in Finland, Finnish Centre for Pensions, 2005.
19. Börsch-Supan (MEA), What are NDC Pension Systems? What Do They Bring to Reform Strategies?, in Holzmann and Palmer (eds.), Non-Financial Defined Contribution (NDC) Pension Schemes: Concept, Issues, Implementation, Prospects, World Bank, 2005.
20. Börsch-Supan (MEA), Wilke (MEA), The Reform of the German Public Pension System – Emulating NDC Type Structures?, In: Robert Holzmann and Ed Palmer (eds.), Non-Financial Defined Contribution (NDC) Pension Schemes: Concept, Issues, Implementation, Prospects, World Bank, 2005.
21. Börsch-Supan, A. (Mannheim), Schnabel, R., Kohnz, S., G. Mastrobuoni (2004): Micro Modelling of Retirement Choices in Germany, In: J. Gruber and D. Wise (Hrsg.), Incentive Effects of Public Pension Systems, University of Chicago Press.
22. Börsch-Supan,
A., Ludwig, L., J. Winter (Mannheim) (2003): Aging, pension reform, and
capital flows: A multi-country simulation model. MEA Discussion paper
28-2003.
We present a quantitative analysis of international capital flows induced by
differential population aging and pension reform. It is well known that within
each country, demo-graphic change alters the time path of aggregate savings.
This process may be amplified if pension reform shifts old-age provision towards
more pre-funding. While the patterns of population aging are similar in most
countries, timing and initial conditions differ substantially. Hence, to the
extent that capital is internationally mobile, population aging will induce
capital flows between countries. In order to quantify these effects, we develop
a multi-country overlapping generations model and use long-term demographic
projections for several world regions to project international capital flows in
the course of population aging. Our simulations suggest that capital flows from
fast-aging industrial countries such as Germany, Italy or Japan to the rest of
the world will be substantial. We also conclude that closed-economy models of
pension reform miss quantitatively important effects of international capital
mobility.
23. Brugiavini (Venice), F. Peracchi, The Length of Working Lives in Europe, Journal of the European Economic Association, vol. 3, April-May, p.1-10, 2005.
24. Brugiavini
A. (Venice), F. Peracchi (2004), Micro-Modeling of Retirement Behaviour
in Italy, in: “Social Security Programs and Retirement around the World:
Micro-Estimation”, J. Gruber and D. A. Wise (eds.) , The University of
Chicago Press, Chicago, p. 345-399.
This paper uses administrative records from the Italian social security
administration to study the retirement decisions of Italian private sector
employees. Our analysis emphasizes the role played by the financial incentives
built in the social security system. The basic idea is very simple: at any given
age, and based on the available information, workers compare the expected
present value of two alternatives: retiring today and working one more year, and
then choose the best one. A key role in this kind of comparisons is played by
social security wealth. The various incentive measures that we consider differ
in the precise weight given to the social security wealth that workers accrue as
they continue to work. Our model does not provide a structural representation of
the retirement process. A worker's decision is modelled here following a
“quasi-reduced form" approach, with the incentive measures entering as
predictors of the worker's choice in addition to standard variables. The
estimated models are then used to predict retirement probabilities under
alternative policies that change social security wealth and derived incentive
measures.
25. Brugiavini
A. (Venice), F. Peracchi, D. Wise, (2003), Pensions and retirement
incentives, a tale of three countries: Italy, Spain and USA, Giornale degli
Economisti e Annali di Economia, vol. 61, n. 2, p. 131-170.
This paper looks at the relationship between the
institutional design of the social security system and retirement from the
labour force in three countries: Italy, Spain and the USA. Our works stresses
the importance of dynamic incentives embedded in social security systems
throughout the world and makes use of these three countries as an example. In
fact they provide enough variability in their welfare programs that can be
exploited to explain differences in retirement behaviour. We show that social
security rules are very important for individual's decisions to retire at a
given age and that policy changes aimed at achieving age-neutrality of social
security systems have a crucial role in shaping welfare.
26. Erlinghagen (MEA), Hank (MEA), Participation of Older Europeans in Volunteer Work, MEA Working Paper n. 071-05.
27. Fonseca (Salerno), Redistributive Effects of Social Security Reforms across Europe, CSEF Working Papers n 138, 2005. http://www.csef.it//WP/wp138.pdf
28. Fonseca,
R. (Salerno), T. Sopraseuth, “Redistributive Effects of Social Security
Reforms across Europe: the case of France and Italy, May 2004, mimeo, University
of Salerno.
In this article, we examine the impact of Social Security reforms on welfare and
inequalities across social groups in an environment with altruism in which
agents face uncertainties with regards to their employment status, mortality and
social category. Our general equilibrium model is an overlapping generations
model with finite but random-lived individuals facing saving constraints and
intergenerational transfers. Retirement decisions and savings are endogenous. We
measure the consequences of Social Security reforms on individual's retirement
decisions and the distribution of wealth. Finally, we can also compute different
measures of inequalities and welfare. We apply the model to France and Italy.
France has been characterized by small reforms conserving the defined social
security system with no fundamental change. While Italy has given up its
generous social security system to a mixed system with a strong contributive
flavour
29. Gielen (Tilburg), Age-specific cyclical effects in job reallocation and labour mobility, 2005, http://center.uvt.nl/phd_stud/gielen/
30. Gonzalez-Chapela (Young Researcher MEA), How Do European Older Adults Use Their Time?, In: Borsch-Supan et al (eds.), Health, Ageing and Retirement in Europe - First Results from the Survey of Health, Ageing and Retirement, Mannheim: MEA, S. 265-271, 2005.
31. Hank (MEA), Jürges (MEA), Gender and the Division of Household Labour in Older Couples: A European Perspective, MEA Working Paper n. 076-05.
32. Kalwij (Tilburg), Vermeulen (Young Researcher Tilburg), Labour force participation of the elderly in Europe, 2005.
33. Leers, Meijdam (Tilburg), Verbon (Tilburg), Ageing, Migration, and Endogenous Pensions, Journal of Public Economics 88, 131-159.
34. Ludwig (MEA), Ageing and Economic Growth: The Role of Factor Markets and of Fundamental Pension Reforms, MEA Working Paper n. 095-05.
35. Michaud
P.C. (Tilburg), Vermeulen F. (Young Researcher Tilburg), A
collective retirement model: identification and estimation in the presence of
externalities, mimeo, 2004
In this paper, we study the labour supply dynamics of elderly couples. For this,
we introduce a structural model that is embedded in the collective approach to
household behaviour. The model captures features like state-dependence and joint
retirement of spouses in older couples. It further does not only look at the
extensive margin (working versus being retired), but also at the intensive
margin (how many hours are worked) and the claiming decision for social security
benefits. We apply the model to American households coming from the first five
waves of the Health and Retirement Study. We also provide model simulations for
two widely discussed reform proposals; more specifically the abolition of the
earnings test and the elimination of the spouse benefit.
36. Michaud,
P.C. (Tilburg), Joint labour supply dynamics of older couples, CentER
Discussion Papers 2003, 69/ IZA DP382 (http://econpapers.hhs.se/paper/izaizadps/dp832.htm)
This paper studies the labour force participation dynamics of older couples in
the United States. Longitudinal data from the five available waves of the Health
and Retirement Study (HRS) is used to investigate if the dynamics introduced by
considering both spouses' behaviour provide additional information in trying to
fit observed participation sequences. The paper uses a bivariate dynamic binary
choice model with unobserved heterogeneity and serial correlation to disentangle
the many sources of dynamics and correlation in a couple's decision making.
First, strong true state-dependence is found and results in a bunching of
participation and non-participation sequences. Cross-spouse state-dependence is
also found which points to indirect effects of social security and pension
incentives through complementarity in leisure. Second, the Spouse Allowance
program is found to have predicted effects on participation of the couple and
these effects are statistically significant. A simulation exercise presents
evidence that the elimination of the spouse allowance can raise participation of
wives at age 62 by more than the decrease in participation of husbands at age
65.
37. Tatsiramos (Young Researcher Cyprus and Tilburg), Employment Dynamics of Married Women in Europe, IZA Discussion Paper 1706, 2005, ftp://ftp.iza.org/dps/dp1706.pdf
38. Tatsiramos (Young Researcher Cyprus and Tilburg), Job Displacement and Labour Market Transitions of Elderly in Europe, 2005.
39. Tatsiramos
K. (Young Researcher Tilburg), The Persistence of
Unemployment/Non-Participation in Europe (work in progress jointly with
Pierre-Carl Michaud, Tilburg University), 2004
We use eight waves from the European Community Household Panel (1994-2001) to
investigate persistence in unemployment / non-participation for six European
countries (France, Germany, Italy, Netherlands, Spain and the United Kingdom)
using dynamic binary choice models.
40. Vermeulen
F. (Young Researcher Tilburg), And the winner is... An empirical
evaluation of two competing approaches to household labour supply”, 2001, Public
Economics Research Paper, DPS 01.23.
An empirical evaluation is presented of two competing flexible labour supply
models. The first is a standard unitary model, while the second is based on the
collective approach to household behaviour. The evaluation focuses on the
testing of the models' theoretical implications and on their ability to identify
structural information, like preferences and the intra-household allocation
process. Models are applied to Dutch microdata from the DNB Household Survey.
The unitary model cannot be rejected for male and female singles, while it is
rejected for a sample of couples. The alternative collective model cannot be
rejected for the same sample, allowing identification of individual preferences
and an intra-household sharing rule that can be used as a basis for welfare
economic policy evaluations.
41. Von Gaudecker (Young Researcher IFS), Weber, Surprises in a Growing Market Niche: An Evaluation of the German Private Annuities Market, The Geneva Papers of Risk and Insurance - Issues and Practice, 29, 3, 394-416, 2004.
42. Wilke (MEA), Rates of Return of the German PAYG System - How they can be measured and how they will develop, MEA Working Paper n. 097-05.
1. Adda (IFS), Banks (IFS), Von Gaudecker (Young Researcher IFS), The impact of Income Shocks on Health: Evidence from English Cohorts, 2005.
2. Alessie
R. (Tilburg), Deeg D., Portrait F., “Disentangling the Age, Period, and
Cohort Effects using a Modeling Approach : an application to trends in
functional limitation at older ages” (http://www2.econ.uu.nl/users/alessie/cohortmethode(april%202003)(3).pdf)
Disentangling age, period, and cohort effects in explaining health trends is
crucial to assess future prevalence of health disorders. The identification
problem -- age, period, and cohort effects are perfectly linearly related -- is
tackled by modelling cohort and period effects using lifetime macro-indicators.
This approach -- innovative in analyses on health trends -- handles the
identification problem and explains mechanisms underlying cohort and period
effects. The modelling approach is compared with graphical and two-factors
methods. The methods are applied on Dutch trends in functional limitations using
data from the Longitudinal Aging Study Amsterdam. We argue that the modelling
approach is a highly appropriate alternative. We find that the prevalence of
functional limitations increases in the nineteen-nineties due to adverse cohort
and period effects. Cohort effects are explained by hygienic and socioeconomic
conditions during childhood and period effects by restrictions in availability
of health care services.
3. Berloffa
G., A. Brugiavini, D. Rizzi (Venice), (2003) Health, Income and
Inequality: Evidence from a Survey of Older Italians, Il Giornale degli
Economisti e Annali di Economia, vol. 62, n.1, p. 35-55
This paper uses the Survey of Health, Ageing and Wealth (SHAW) to study the
relationship between health status and economic welfare at individual level. We
develop a model to estimate the welfare cost of ill-health: the terminology and
the intuition go along the lines of the equivalence scale literature. While in
that case the focus is on the welfare cost brought about by the presence of
children, we measure the welfare cost of poor health. The crucial variables in
this approach are, besides income and health status, the economic decisions of
the household which can be directly related to health conditions, such as
health-related expenses. By estimating a demand system we derive equivalence
scales based also on health expenditures to learn about the cost of health
conditions on economic welfare, controlling for other covariates. We show that
households characterised by poor health are effectively “poorer” in an economic
sense.
4. Berloffa, Brugiavini (Venice) and Rizzi, Health, Income and Inequality, mimeo, 2005
5. Börsch-Supan (MEA), Brugiavini (Venice), Jürges (MEA), Mackenbach, Siegrist, Weber (Venice), Health, Ageing and Retirement in Europe – First Results from the Survey of Health, Ageing and Retirement in Europe. Mannheim: MEA, 2005
6. Bottazzi
R. (IFS), Health status and portfolio choice: evidence from Italy, mimeo,
September 2003.
This paper analyses household portfolio decisions in relation to health status.
From a theoretical point of view, since health is a non-diversifiable risk,
individuals with poorer health should invest less in risky portfolio, to
compensate the higher risk related to their health status. In Italy, the
universal public health coverage has provided a form of insurance to
individuals, at least until the late 1980's. However, nowadays people are
expected to contribute to some extent to their health expenditure and poorer
health translates into higher out-of-pocket expenditure, at least for some
groups of the population. Therefore, it could be plausible to expect a negative
relationship between health status and investment in risky portfolio also for
Italian households. The data is provided by the Survey of Health, Aging and
Wealth, year 2000. The empirical evidence is not completely convincing on this
point. Depending on the specification and on the definition of risky asset
adopted, the relationship between the probability of investing in risky
portfolio and health status is either negative or negative but not significantly
different from zero.
7. Disney (IFS), Emmerson (IFS), Wakefield (IFS), Ill health and retirement in Britain: A panel data-based analysis’, Journal of Health Economics. (forthcoming).
8. Jappelli,
T., M. Padula (Salerno), The quality of health care: evidence from Italy,
Giornale degli Economisti e Annali di Economia, April 2003, vol. 62,
7-34.
We provide evidence that the quality of health care affects
health outcomes, exploiting the substantial variability in the quality of the
Italian public health service. The data are drawn from the 2001 Survey of
Health, Aging and Wealth (SHAW), a joint venture of the Universities of Padua,
Salerno, Venice and Tilburg, providing detailed information on health status,
medical expenditure and use of hospitals and other health facilities, as well as
detailed demographic and economic variables, for a sample of about 2000
individuals older than 50. The correlation between quality of health care and
health outcomes is also confirmed in the panel section of the 1993-95 Bank of
Italy Survey of Household Income and Wealth, which allows us to measure the
impact of quality by controlling explicitly for regional effects.
9. Michaud (Tilburg), van Soest (Tilburg), Health and Wealth of Elderly Couples: Causality Tests using Dynamic Panel Data Models, IZA Discussion paper 1312, ftp.iza.org/dps/dp1312.pdf
10. Michaud
P.C., A. van Soest (Tilburg), (2004), Health and Wealth of Elderly
Couples: Causality Using Dynamic Panel Data Models, presented at the RTN
Conference in Edesheim.
A positive relationship between socio-economic status (SES) and health, the
so-called "health-wealth gradient", is repeatedly found in most industrialized
countries with similar levels of health care technology and economic well being.
This study uses as point of departure the analysis done by Adams et al. (2003)
who look at tests of non-causality for two different pathways: from health to
wealth (health causation) and wealth to health (wealth or social causation)
using panel data on a sample of elderly Americans. Using five biennial wave of
elderly couples (age 51-69) from the Health and Retirement Study, we compare
their approach with causality tests in dynamic panel data models incorporating
unobserved heterogeneity. We show that unobserved heterogeneity is mostly
responsible for the rejection of the tests in the Adams et al. analysis of SES
causation. We find that health events for husband and wife have a significant
effect on wealth of older couples suggesting that health causality is the main
active mechanism for this age group. Once unobserved heterogeneity is controlled
for, we find very weak evidence of causation from wealth to health (wealth
causation). However, we do find evidence that there is transmission of health
events of husbands to the health of wives, an undocumented channel in this
literature.
11. Romeu
Gordo L. (Young Researcher Venice), (2004), Compression of morbidity and
labour supply of the elderly, mimeo, University of Venice
The objective of the paper is to test whether there is evidence of compression
of morbidity and to analyse, which are the effects on labour supply of the
elderly. I first carry out some descriptive analysis in order to determine
whether younger cohorts of the Health and Retirement Study present less
functional problems than older cohorts. We use the theoretical framework
developed by Grossmann in order to explain differences among cohorts in health
status at given ages. Next, I carry out a multivariate analysis in order to
analyse the effect of disability on labour supply of the elderly, in order to
see whether compression of morbidity will have positive effects on the rates of
employment of the elderly.
12. Sanz de Galdeano (Salerno), Health Insurance and Job Mobility: Evidence from Clinton’s Second Mandate, CSEF Working Paper No. 122, September 2004. http://www.csef.it//WP/wp122.pdf, forthcoming in Industrial and Labour Relations Review.
13. Sanz de Galdeano (Salerno), Job-Lock and Public Policy: Evidence from Clinton’s Second Mandate, forthcoming in the Industrial and Labour Relations Review.
14. Von Gaudecker (Young Researcher IFS), Differential mortality of German retirees, 2005.
[4]
Saving and portfolio decisions
1. Alessie
A., Hochguertel S. (Tilburg), van Soest A. (Tilburg),
Ownership of stocks and mutual funds: a panel data analysis, Review of Economics
and Statistics, September 2004, Forthcoming
This paper analyses the ownership dynamics of stocks and mutual funds, using
representative household panel data, the Dutch CentER Savings Survey 1993-1998.
A bivariate dynamic binary choice model is introduced, accounting for
interactions between the two types of assets. We find that unobserved
heterogeneity and state dependence play a large role for both types of assets.
The positive relation between ownership of one type in one period and the other
type in the next period is explained by correlated unobserved heterogeneity. A
negative state dependence effect of lagged ownership of stocks on ownership of
mutual funds is found, which can be explained by the costs of shifting funds
across the two forms of stock holding.
2. Arrondel (DELTA), Calvo (Young Researcher DELTA), Temperant Portfolio Choice with a Correlated Background Risk, 2005.
3. Arrondel
(DELTA), L., H. Calvo (Young Researcher DELTA), X. Oliver (Young
Researcher DELTA), "Testing Portfolio Choice with a Correlated Background
Risk”, 2004, Paris, DELTA.
Recent empirical evidence has tested the theoretical prediction of risk
substitution theory: households faced with undiversifiable sources of risk on
their income tend to participate less in the stock market and to hold less
stocks than those with a more stable income. One of the most important sources
of undiversifiable income is human capital. Previous empirical work measuring
the importance of earnings risk have been successful though unsatisfactory. This
paper tests whether the correlation between human capital and financial capital
shocks leads to more satisfactory empirical results. Using a recent survey of
French data, we are able to show that households reporting a negative
correlation between both, tend to participate more in the stock market. We offer
a candidate explanation for rejecting risk substitution behaviour in previous
country-specific empirical studies.
4. Arrondel (DELTA), Masson (DELTA), Risk and Time Preferences: Saver Types, 2004.
5. Arrondel,
L., H. Calvo (Young Researcher DELTA), "Portfolio Choice with a
Correlated Background Risk : Theory and Evidence", 2002, Paris, DELTA Doc. 02-16
We extend the static portfolio choice problem with a small background risk to
the case of small partially correlated background risks. We show that respecting
the theories under which risk substitution appears, except for the independence
of background risk, it is perfectly rational for the individual to increase his
optimal exposure to portfolio risk when risks are partially negatively
correlated. Then, we test empirically the hypothesis of risk substitutability
using INSEE data on French households. We find that households respond by
increasing their stockholdings in response to the increase in future earnings
uncertainty. This conclusion is in contradiction with results obtained in other
countries. So, in light of these results, our model provides an explanation to
account for the lack of empirical consensus on cross-country tests of risk
substitution theory that encompasses and criticises all of them.
6. Attanasio (IFS), Bottazzi (IFS), Low, Nesheim, Wakefield (IFS), Explaining Life-Cycle Profiles of Home-Ownership and Labour Supply, 2005.
7. Banks
J., Z. Smith, M. Wakefield (IFS) (2002) ‘ The distribution of financial
wealth in the UK: Evidence from the 2000 BHPS’, IFS Working paper, 02/21
This paper examines evidence
from the British Household Panel Study on the distribution of financial wealth
amongst benefit units in 2000. It also provides some analysis of the links
between financial wealth, pensions and housing wealth. For part of the sample,
the data also allow a comparison of holdings in some elements of the financial
portfolio in 2000, and in 1995
8. Bertaut,
C.C., M. Haliassos (Cyprus), “Credit Cards: Facts and Theories”, mimeo,
May 2004. Paper prepared for the volume edited by G. Bertola, R. Disney (IFS),
and C. Grant on The Economics of Consumer Credit, scheduled to be
published by MIT Press.
We use data from several waves of the Survey of Consumer Finances to document
credit and debit card ownership and use across US demographic groups. We then
present recent theoretical and empirical contributions to the study of credit
and debit card behaviour. Utilization rates of credit lines and portfolios of
card holders present several puzzles. Credit line increases initiated by banks
lead households to restore previous utilization rates. High-interest credit card
debt co-exists with substantial holdings of low-interest liquid assets and with
accumulation of retirement assets. Although available evidence disputes
ignorance of credit card terms by card holders, credit card rates do not respond
to competition, probably as a result of search and switch costs facing
consumers. There is a rising trend in bankruptcy and delinquency, partly
attributable to an increased tendency of households to declare bankruptcy
associated with reduced social stigma, ease of procedures, and financial
incentives. Strategic default motives contribute partly to observed co-existence
of credit card debt with low-interest liquid assets. Several card holders
believe that credit cards create problems of self-control, mainly because of
overspending, while debit cards are regarded as instruments for self-control.
Although the choice of debit versus credit cards at the point of sale seems
consistent with their relative costs, co-existence of credit card debt with
liquid and retirement assets seems to require departures from the standard
framework. Hyperbolic discounting has been shown to account for the first
co-existence. A framework of “accountant-shopper” households, in which a
rational accountant tries to control an impulsive shopper, seems consistent with
both types of co-existence and with observed utilization of credit lines.
9. Bilias (Cyprus), Georgarakos (Young Researcher Cyprus), Haliassos (Cyprus), Portfolio Inertia and Stock Market Fluctuations”, presented at the Capital Markets and the Economy Workshop, NBER Summer Institute, July 2005. (http://www.nber.org/~confer/2005/si2005/efelprg.html)
10. Bilias (Cyprus), Haliassos (Cyprus), The Distribution of Gains from Access to Stocks, CSEF working paper n. 125, November 2004, Salerno, http://www.csef.it/wpcsef.htm
11. Bilias,
Y., D. Georgarakos (Young Researcher Cyprus), M. Haliassos, “Equity
Culture and the Distribution of Wealth”, mimeo, July 2004. Paper accepted for
presentation at the 2004 NBER Summer Institute.
It is often presumed that wealth inequality is reduced by wider access to
stockholding opportunities. We investigate changes in the US distribution of
wealth between 1989 and 2001. We find inequality in equity holdings to be
important for changes in net wealth inequality, despite equity’s limited share.
We estimate the contribution of household characteristics to inequality in
equity holdings among stockholders. Counterfactual distributions separating the
roles of changes in ‘returns’ to investor characteristics and of changes in
characteristics of the stockholder pool imply a worsening of the stockholder
pool between 1989 and 1998, but an improvement following the downswing. Most of
the education effect is observed in the upper tail of the distribution of equity
holdings, and higher education is associated with less inequality in stock
wealth. Simulations of an intertemporal portfolio model show that this
equalizing effect of education is unlikely to arise from differences in
age-income profiles and income shock processes alone. Results from bivariate
probits with selection suggest that making cumulative gains and avoiding losses
are significantly influenced by length of investment horizon and portfolio
breadth. Controlling for those, use of professional advice is either
insignificant or counterproductive. If progressively less qualified marginal
stockholders are drawn into the pool, spread of equity culture is unlikely to be
accompanied by a reduction in wealth inequality.
12. Bilias,
Y., M. Haliassos (Cyprus), “The Distribution of Gains from Access to
Stocks”, mimeo, June 2004. Paper accepted for presentation at the 2004 NBER
Summer Institute.
Recent market developments raise doubts regarding further spread of household
stock market participation. We study, computationally and econometrically, net
gains from access to stocks, and estimate the potentially changing role of their
determinants across the distribution of such gains for US households. We
highlight conflicting influences on net gains using a computational portfolio
model, and use empirical estimates to derive differences in characteristics of
potential entrants relative to marginal investors by the end of the dramatic
recent expansion in the stockholder base. Findings suggest that downturns can
have significant effects around the participation margin, through their
influence on incomes, wealth, and employment. The role of education is found to
be more limited than typically estimated, and confined to the low end of the
gains distribution. Estimated characteristics of potential entrants relative to
marginal stockholders suggest that further growth in participation poses
considerable challenges, in view of more limited finances, younger age, more
limited education and financial alertness, and above all significantly less
self-declared willingness to assume financial risk by potential stockholders
compared to marginal investors. The hurdle to financial practitioners interested
in expanding the stockholder base is not estimated to be small.
13. Bommier A.
(DELTA): “Valuing Life Under the Shadow of Life”, Gremaq DP 2003
(Toulouse).
This paper develops an axiomatic construction of preferences that allows to
compare lotteries involving lives of different lengths. Our axioms which
basically formalize two assumptions - individuals are rational and have
stationary preferences - leads to a class of utility functions that is much
larger than the set of separable additive utility functions. We discuss a number
of appealing properties associated with non additive utility functions and
explore the implications for life cycle behaviour. The results lead to a
fundamental shift in how the risk of death may be expected to affect
intertemporal choices. In particular, the rate of time discounting is shown to
be related to mortality and to the way life is valued. This explains why
"impatience" may significantly vary along the life cycle as well as why it may
change with time during periods of mortality decline. Reciprocally, information
on the value of life can also be derived from the variation of the rate of time
discounting
14. Calvo (Young Researcher DELTA), Mavridis (Young Researcher DELTA), Intertemporal Portfolio Choice, Uninsurable Earnings and the Portfolio Specialization Puzzle, 2005.
15. Christelis (Young Researcher Salerno), Jappelli (Salerno), Padula (Salerno), Health Risk, Financial Information and Social Interactions: the Portfolio Choice of European Elderly Households, 2005.
16. Dimitrova (Young Researcher Cyprus), Impact and Measurement of Financial Literacy, Doctoral Students Workshop, Varna Free University, Varna, December 2004.
17. Dimitrova (Young Researcher Cyprus), Probable Reasons for Existing Puzzles in Emerging Financial Markets. The Role of Financial Risk Perceptions, Annual Book, Varna Free University, 2005.
18. Essig,
L., J. Winter (Mannheim), Item non-response to financial questions in
household surveys: An experimental study of interviewer and mode effects, mimeo,
2004.
We analyse non-response to questions on financial items such as income and asset
holdings in household surveys using data from a controlled field experiment. As
part of the SAVE study, a representative survey conducted in Germany in 2001,
questions on household income and financial assets were administered using
different modes (personal interview vs. drop-off questionnaire). The data also
allow to investigate the influence of interviewer characteristics on
non-response. Our results are in line with predictions derived from models of
survey response behaviour that have been developed in survey research and social
psychology.
19. Georgarakos,
D. (Young Researcher Cyprus), “Risky Assets Ownership Decisions by the
Elderly in the UK: Evidence from the Retirement Survey”, mimeo, 2003
We utilize panel data from the Retirement Survey in order to shed more light on
the risky asset ownership decision of the elderly that are about to or have
recently retired. The unique nature of the dataset allows us to control for a
variety of factors (changes in retirement status, receipt of a lump sum, timing
of retirement, persistent health problems) giving insight for the portfolio
behaviour of the older segment of the UK population over the period 1988-94. Our
findings provide support to decreasing absolute risk aversion preferences
suggesting that those that were less successful in the accumulation of lifetime
wealth do not wish stock market exposure. The analysis points to the importance
of fixed entry costs in investing in risky assets and highlights the role of
monitoring fees and inertial behaviour in portfolio allocations over time.
20. Georgarakos,
D. (Young Researcher Cyprus), “The Households’ Portfolio
Composition over the Lifecycle”, mimeo, 2003
We model household portfolio choices and asset demands as joint decisions, in
the spirit of King and Leape (1998). Under the presence of incomplete household
portfolios, the fact that some assets are not held will have “spill over”
effects on the demand for the remaining assets. We employ appropriate
econometric specifications in order to control for the impact of various
socioeconomic characteristics and the presence of other assets in the portfolio,
on the joint discrete and continuous household portfolio decisions. We derive
cohort ownership profiles and investment shares for various assets giving a
picture for changes in portfolio composition over time. In addition we have
estimated wealth elasticities of demand for designated asset categories.
21. Georgarakos,
D. (Young Researcher Cyprus), “UK Households’ Demand Decisions for Risky
Assets: Evidence from the Family Resources Survey”, mimeo, 2004
The main aim of this paper is to shed more light on UK households’ demand
decisions for risky financial assets. The analysis controls for household
specific characteristics that are expected to influence portfolio behaviour. Our
findings, in line with evidence from other countries, suggest that most of the
households do not hold widely diversified portfolios while age, education and
accumulated wealth seem to be important determinants in the decision to invest
in risky assets. There is also evidence that fixed entry and information costs
in the stock market, affect UK households’ portfolio decisions. The empirical
evidence is based on the Family Resources Survey.
22. Jappelli,
T. (Salerno), L. Pistaferri, Tax incentives and the demand for life
insurance: evidence from Italy, Journal of Public Economics, July 2003,
vol. 87, n. 7-8, 1779-1799.
The theoretical literature suggests that taxation can have a large impact on
household portfolio selection and allocation. In this paper we analyse the tax
treatment of life insurance, considering the cancellation of tax incentives in
Italian life insurance contracts for investors with high marginal tax rates and
the introduction of incentives for those with low rates. Using repeated
cross-sectional data from 1989 to 1998, we find that the tax reforms had no
effect on the decision to invest in life insurance or the amount invested. The
likely explanations are the lack of information and lack of commitment to
long-term investment.
23. Jappelli,
T. (Salerno), L. Pistaferri, Tax incentives to borrow and the demand for
mortgage debt: an analysis of tax reforms, CSEF Working Paper n. 90, May 2003,
http://www.csef.it//WP/wp90.pdf.
Before 1992 mortgage interest in
Italy was fully tax deductible up to 3,500 Euro (7,000 for two co-signers). In
1992-94 the government implemented a series of tax reforms whose ultimate effect
was to cancel the relation between the after-tax mortgage rate and the marginal
tax rate. Using data from the 1987-2000 Survey of Household Income and Wealth we
test if the cancellation of incentives has reduced the propensity to borrow of
high-income taxpayers relative to the other population groups.
Difference-in-differences estimates and regression analysis indicate that tax
considerations have not affected the demand for mortgage debt, either at the
extensive or intensive margin.
24. Jappelli,
T. (Salerno), L. Pistaferri, Tax incentives to saving and borrowing, in
Taxation of Financial Intermediation, Patrick Honohan (ed). Oxford:
Oxford University Press, 2003.
The paper reviews the literature on these tax incentives, with special focus on
long-term saving, housing, and household liabilities. The paper addresses
several areas of policy intervention: (1) the interest rate effect on personal
saving; (2) the effect of tax incentives on long-term mandatory saving programs;
(3) government programs that target saving for home purchase; (4) government
programs that target health and saving for education; (5) the effect of tax
incentives to borrow, rather than to save. For each of these five important
issues, the paper provides empirical evidence on the main characteristics of
government programs, with a special focus on middle-income countries. It also
addresses a number of issues that should be of interest to policy-makers. First
of all, on which grounds government policy should target some assets rather than
others. Second, if tax-sheltered assets and liabilities lead to substitution
away from more heavily taxed savings instruments or if they affect the overall
level of saving. And finally, if there is any lesson that can be drawn from the
experience of developed countries for the design of saving and borrowing
incentives in middle-income countries.
25. Jappelli,
T., M.C. Chiuri (Salerno), Financial market imperfections and home
ownership: a comparative study, European Economic Review, October 2003,
vol. 47, n. 5, 857-875.
We explore the determinants of the international pattern of home ownership using
a collection of microeconomic data on fifteen OECD countries. In most, the
cross-section is repeated over time and includes several demographic variables
carefully matched between the different surveys. This allows us to construct a
truly unique international dataset, merging data on 43 national household
surveys with aggregate panel data on mortgage loans and down payment ratios.
After controlling for demographic characteristics, country effects, cohort
effects and calendar time effects, we find strong evidence that the availability
of mortgage finance – as measured by outstanding mortgage loans and down payment
ratios – affects the age-profile of home ownership, especially at the young end.
The results have important implications for the debate on the relation between
saving and growth.
26. Ludwig (MEA), Sloek, The Relationship between Stock Prices, House Prices and Consumption in OECD Countries, Topics in Macroeconomics, Vol.1, Iss. 1 Article 4, 2004.
27. Maurer (Young Researcher, IFS), How Do Risk Attitudes Change With Wealth? Nonparametric Evidence from a Hypothetical Gamble, 2005
28. Pelizzon,
L., G. Weber (Venice) (2003), “Are Household Portfolios Efficient? An
Analysis Conditional on Housing”, mimeo, May 2003.
In this Paper we argue that standard tests of portfolio efficiency are biased
because they neglect the existence of illiquid wealth. In the case of household
portfolios, the most important illiquid asset is housing: if housing stock
adjustments are costly and therefore infrequent, we show how the dynamic
optimisation problem produces optimal portfolios in periods of no adjustment
that are affected by housing price risk (through a hedge term). When the housing
stock is not adjusted, we argue that tests for portfolio efficiency of financial
assets must then be run conditionally upon housing wealth. In our application,
we use Italian household portfolio data from SHIW 1998 and time series data on
financial asset and housing stock returns to assess whether actual portfolios
are efficient. We first consider purely financial portfolios and portfolios that
also treat the housing stock as another asset. We then consider the consequences
of treating the housing stock as given and test for efficiency in this
framework. Our empirical results support the view that the presence of illiquid
wealth plays an important role in determining whether portfolios chosen by
home-owners are efficient.
29. Sommer (MEA), Trends in German households’ portfolio behaviour - assessing the importance of age- and cohort-effects, MEA Working Paper n. 082-05.
1. Browning (CAM), Carro (Young Researcher CAM), Heterogeneity in applied microeconometrics, World Congress of the Econometric Society, London, August 2005.
2. Browning, M. (Copenhagen) (2003), Living standards before and after retirement, May 2003.
3. Cherchye
L., De Rock B., Vermeulen F. (Young Researcher CenTER), The
collective model of household consumption: a nonparametric characterization,
Working Paper, 2004
We provide a nonparametric characterization of a general collective model for
multi-person household consumption, which includes externalities and public
goods. We derive the minimum number of commodities and observations that enable
the falsification of this general model from aggregate household quantity and
price data; these requirements are generally less stringent than the conditions
derived by Browning and Chiappori (1998) within a parametric setting. Next, we
institute a necessary and sufficient conditions for collectively rational
household behaviour that only includes observed price and quantity information.
To illustrate the generality of the collective model, we also discuss a number
of interesting special cases, including the traditional unitary model and the
collective labour supply model à la Chiappori (1988).
4. Cherchye, De Rock, Vermeulen (Young Researcher Tilburg), Opening the black box of intra-household decision-making: theory and non-parametric empirical tests of general collective consumption models”, CentER Discussion Paper 2005-51, Tilburg, CentER. http://ideas.repec.org/p/iza/izadps/dp1603.html.
5. Cherchye, De Rock, Vermeulen (Young Researcher Tilburg), The collective model of household consumption: a nonparametric characterization, CentER Discussion Paper, 2004-76, Tilburg, CentER. http://greywww.kub.nl:2080/greyfiles/center/2004/doc/76.pdf
6. Christensen (Young Researcher, IFS) Demand Patterns Around Retirement: Evidence from Spanish Panel Data , 2005.
7. Christensen (Young Researcher, IFS) Heterogeneity in Consumer Demands and the Income Effect: Evidence from Panel Data , 2005.
8. Christensen (Young Researcher, IFS) Integrability of Aggregate Demand with Unobservable Heterogeneity: A Test on Panel Data, 2005.
9. Essig (MEA), Imputing total expenditures from a non-exhaustive list of items: An empirical assessment using the SAVE data set, MEA Working Paper n. 081-05.
10. Essig (MEA), Methodological aspects of the SAVE data set, MEA Working Paper n. 080-05.
11. Gonzalez-Chapela (Young Researcher MEA), On Measuring Convergence in the Use of Time, MEA Working Paper n. 096-05.
12. Hank (MEA), Spatial Proximity and Contacts between Elderly Parents and Their Adult Children: A European Comparison, MEA Working Paper n. 098-05.
13. Jappelli (Salerno), Padula (Salerno), Pistaferri, A direct test of the buffer stock model of saving, 2005.
14. Jappelli (Salerno), Pistaferri, Intertemporal choice and consumption mobility, Journal of the European Economic Association, forthcoming.
15. Koulovatianos,
C. (Cyprus), Carsten Schröder, and Ulrich Schmidt, “On the Income
Dependence of Equivalence Scales”, mimeo, February 2004. Paper presented at the
Mannheim AGE RTN meeting and conditionally accepted for publication in the
Journal of Public Economics.
We suggest a simple survey method for obtaining direct subjective estimates of
equivalence scales, also appropriate for testing whether equivalence scales
depend on reference-household income. We implement our approach in two
countries, Germany and France. In both countries independence of base is
rejected. In particular, we find that equivalence scales depend negatively on
reference income, an indication of increasing economies of scale in household
consumption as living standards go up. Our estimation method is non-parametric,
and it allows us to test generalized equivalence-scale exactness, which is not
rejected in any of our samples.
16. Lührmann, M. (Mannheim) (2003): Demand Changes in an Aging Economy, paper presented at the Third Workshop of the RTN Project on Economics of Ageing held in London on 2-4 October 2003, mimeo.
17. Maurer (Young Researcher, IFS), and André Meier, Do the "Joneses" Really Matter? Peer-group vs. Correlated Effects in Intertemporal Consumption Choices", IFS Working Paper WP 05/15.
18. Michaud (Tilburg), Vermeulen (Young Researcher Tilburg), A collective retirement model: identification and estimation in the presence of externalities, CentER Discussion Paper, 2004-75, Tilburg, http://ideas.repec.org/p/iza/izadps/dp1294.html .
19. Miniaci
R. (Venice), C. Monfardini, G. Weber (Venice), (2003) “Is There a
Retirement Consumption Puzzle in Italy?”, mimeo, August 2003.
In this paper we investigate the way consumption changes around retirement in
Italy. Using micro data covering the 1985-96 period, we find that consumption
age patterns are similar to those found in the US and other developed countries,
despite the much more wide-spread cohabitation of different generations. We also
document the existence of a one-off drop in consumption at retirement of the
household head, as in the UK and the US, and find that consumption of
work-related goods falls around retirement age and home production of food and
other goods increases. Given that we can provide evidence that Italian
households who retired over the sample period knew reasonably well what their
pension income would be, the only reason why forward looking consumers should
reduce spending around retirement is because of their increased consumption of
leisure. We do find evidence that the abrupt falls in total non-durable
consumption at retirement disappear when leisure is taken into account, in
agreement with the predictions of the life-cycle theory. This finding is robust
to the way consumption is attributed to different household members, and to
exclusion of non-nuclear households from the analysis.
20. Tatsiramos
K. (Young Researcher CenTER), Residential Mobility and the Housing
Adjustment of the Elderly: Evidence from the ECHP for 6 European Countries,
Working Paper, 2004
We study the determinants of mobility and the housing behaviour of the elderly
employing individual data from the European Community Household Panel, for six
countries, finding a North-South divide. Retirement induces mobility in France,
Germany, and the UK, while the death of the spouse in Italy and Spain.
Homeowners are less likely to move relative to renters, while mobility is
increased for the older owners. Analysing the housing tenure transitions we find
that in the North the owners who move and remain owners reduce their home size,
while those above 75 years old are more likely to become renters, indicating
some downsizing later in life.
21. Winter (MEA), Response bias in survey-based measures of household consumption, Economics Bulletin 3:9, S. 1-12, 2004.
1. Arrondel (DELTA), Grange (DELTA), Estates and Heirs in Rural 19th Century Society: Example of TRA Families from the Loire-Inférieure, 2005.
2. Arrondel (DELTA), Grange (DELTA), Transmission and inequality of wealth: An empirical study of wealth mobility from 1800 to 1938 in France, 2005.
3. Arrondel (DELTA), Masson (DELTA), Altruism, Exchange or Indirect Reciprocity: What Do the Data on Family Transfers Show? Forthcoming in Handbook on the Economics of Giving, Reciprocity and Altruism, Mercier-Ythier J. et S. C. Kolm eds. North-Holland.
4. Arrondel (DELTA), Masson (DELTA), Individual Preferences and the Distribution of Wealth, September 2004.
5. Arrondel,
L. (DELTA), C. Grange, "The Accumulation and Transmission of Wealth Over
Long Periods: Example of a Rural Family from Loire-Atlantique in the 19th and
20th Centuries", The History of the Family: An International Quarterly,
2003, 8, 103-134.
In this paper, we reconstruct the wealth path of an ascending line of
descendants in a rural area in the XIX and XX century and we describe
theoretically the process of accumulation and transmission of wealth with
microeconomic models of saving. The wealth profile of each generation was build
with all their transactions over the life cycle (purchase, sale, exchange,
marriage settlement, gift, inheritance). In this prospect, we use the records of
the Registration. This data allowed us to illustrate several wealth accumulation
models (life cycle hypothesis, inheritance models, intra-family exchange). In
future research, we want to build a sample of lines of descendants to develop
new empirical tests of theoretic model based on historical data. More generally,
we could tackle the question of relevance of modern theoretic model to explain
wealth behaviour in the past.
6. Arrondel,
L., A. Masson (DELTA) "Le patrimoine et ses logiques d'accumulation",
forthcoming in Les avatars du lien social, A. Supiot (ed.), LGDJ, Paris,
2004.
This article considers four models of household wealth accumulation, which
differ principally in terms of the length of the time horizon. The myopic model
is characterised by a very short time horizon, with models levels of wealth
tracking income, while life-cycle models suppose that individuals maximise over
the whole of their expected lifetime. Third, in the dynastic or long-sighted
model individual preferences include the welfare of future generations. While
the life-cycle household aims to consume all of its resources over its lifetime,
dynastic households make bequests to their children. Last, some large fortunes
seem to be motivated by a desire for power, economic or otherwise, social
status, or a desire for immortality. We distinguish two types of saving: saving
for oneself, and saving for others or as an end in itself. The latter results
from the last two models of wealth accumulation. We propose a typology of wealth
accumulation in French households which crosses the four types of motivation
with the two types of saving.
7. Arrondel,
L., A. Masson (DELTA), "Altruism, Exchange or Indirect Reciprocity: What
Do the Data on Family Transfers Show?", in The Economics of Giving,
Reciprocity and Altruism, Mercier-Ythier J. et S. C. Kolm eds., North
Holland, 2004 (forthcoming).
Most models of family transfers consider only two generations and focus on two
motives : altruism and exchange. They also assume perfect substitution between
inter vivos financial transfers and bequests to children. On the contrary, this
survey of recent developments in the literature emphasizes the strong
heterogeneity of downward financial transfers and motives for these
transfers over the life-cycle. In face of the empirical failure of standard
models in developed countries (these models may perform better in less developed
countries or in old Europe), it also advocates "mixed" motivations of
transfers, such as strategic altruism, models with endogenous heterogeneous
behavioural regimes (Becker, Cigno), and especially indirect reciprocities
between three generations, which lead to the replication of the same type of
transfer from one generation to the next. Indirect reciprocities appear able to
accommodate several empirical puzzles : they are thus compatible (against
altruism) with small compensatory effects of transfers both between and within
generations, and (against exchange) with the lack of parents' observable
counterpart to financial or time support given by their children. They also
predict "3rd generation effects" - transfers between parents and
children being determined by grandparents' transfers or again grandchildren's
characteristics - which appear corroborated by (mainly French or U.S.) available
evidence. We thus face the challenge of innovative modelling of indirect
reciprocities within the framework of individual forward-looking rationality.
8. Masson,
A. (DELTA), "Economie du débat intergénérationnel : points de vue
normatif, comptable, politique", chapter 1 in Age, générations et contrat
social, J. Véron, S. Pennec et J. Legaré (eds.), Editions de l'Ined, Paris,
2004, p. 15-58.
This paper analyses three debates related to intergenerational economics. The
first one is normative : it deals with the responsibility of individuals towards
their successors: is individual altruism enough, or must the State represent the
absent and the young children ? In the latter case, public "solidarities" rest
on indirect reciprocities (between three generations) and go both ways : the
problem of the " just inheritance " (education, bequests, environment…) to the
next generations and that of the " just claim " (public debt, pay-as-you-go
retirement system) on these generations are closely linked. The second debate
is positive : it concerns the sustainability of transfer policies, as measured
by generational accounting : the method rests on a virtual scenario which
should, ideally, eliminate purely conjunctural measures. In any case, as the
accounts focus mainly on the problem of the just claim, while ignoring the non
monetary future services of public expenditures problem of the just claim, while
ignoring the non monetary future services of public expenditures (investments),
Kotlikoff's alarmist conclusions about generational equity do no appear
warranted. The third debate concerns the optimal level and the priorities
(towards the young or the old) of age redistribution. The Beckerian model of
intergenerational cooperation has the original feature to combine family
altruism with a high level of public, downward and especially upward,
redistribution: such a surprising stand can be explained by Becker's
paternalistic (neo-Marshallian) view of the Welfare State). The contradictions
of this model, however, tell in favour of extensions borrowed from anthropology
: altruism could be advantageously replaced by indirect reciprocities ; and the
fundamental "ambivalence" of any gift or transfer should lead to new models
combining elements of intergenerational cooperation and fighting.
9. Masson,
A. (DELTA), "Méthodes et usages des comptes générationnels: un regard
décalé", Economie et Prévision, 154, 2002, p. 1-24.
This paper presents a critical evaluation of generational accounting (denoted CG
in French), as it has been initiated by Kotlikoff and his colleagues.
Kotlikoff's great error, which has been the cause of multiple misunderstandings,
is to have used CG results both in order to estimate the long term unbalance of
current public policy and to measure resulting actual inequalities between
generations, thus confusing indicators of sustainability and measures of
generational equity . We show that these two objectives cannot be simultaneously
fulfilled : the first one, which is the purpose of CG , requires a thought
experiment made in a static and purely accounting framework, and uses a cost or
a cash-received basis (for the government) ; the second one needs a more
ambitious dynamic framework, using a utility-based approach (for the consumer).
However, both types of information appear needed and complementary for
government decisions.