Pension Reform Retirement ages, and labour Supply in the United States and the european Union(EU15)19502060 Christian Toft, Edward Whitehouse, and gary burtless Beijing Normal University China Wednesday 22 May 2013 U N I KASSEL VER SIT AT
Pension Reform, Retirement Ages, and Labour Supply in the United States and the European Union (EU15) 1950-2060 Christian Toft, Edward Whitehouse, and Gary Burtless Beijing Normal University, China, Wednesday 22 May 2013
Outline 1: Introductⅰon 2 Reform and trends in normal and early pension eligibility age provisions 3: Pre-and post-reform incentives to retire 4: Reform and trends in labour market participation 5: Reform and future labour supply 6: Conclusion and discussion U N I KASSEL VER SIT AT
2 Outline 1: Introduction 2: Reform and trends in normal and early pension eligibility age provisions 3: Pre- and post-reform incentives to retire 4: Reform and trends in labour market participation 5: Reform and future labour supply 6: Conclusion and discussion
Abstract/Summary a Taking a long 60 year look at trends in pensionable age policy this chapter places current policy initiatives in a broader context and considers how the different policies in the U.S. and Eu15 countries have impacted on labour supply and participation of older people and how recent policies currently being phased-in are projected to impact during the next 50 years a We argue that the substantial gap between the participation rates on the two continents developing until the mid 1990s can largely be explained by differences in retirement age policy and that the much stronger increase in participation in EU15 vis-a-vis the U.S. during the past 15 years is one of the fruits of the new policies that have been adopted o Indeed, projections of the impact of retirement age reform discussed in the chapter indicates that in future we can expect eu15 countries to have higher participation rates for older people than the United States, thereby turning the pattern of the past forty years on its head U N I KASSEL VER SIT AT
3 Abstract / Summary Taking a long 60 year look at trends in pensionable age policy this chapter places current policy initiatives in a broader context and considers how the different policies in the U.S. and EU15 countries have impacted on labour supply and participation of older people and how recent policies currently being phased-in are projected to impact during the next 50 years. We argue that the substantial gap between the participation rates on the two continents developing until the mid 1990s can largely be explained by differences in retirement age policy and that the much stronger increase in participation in EU15 vis-à-vis the U.S. during the past 15 years is one of the fruits of the new policies that have been adopted. Indeed, projections of the impact of retirement age reform discussed in the chapter indicates that in future we can expect EU15 countries to have higher participation rates for older people than the United States, thereby turning the pattern of the past forty years on its head
Socio-economic context of pension reform Socio-demographic trends a People live longer and get fewer children Changing labour markets 0 Men retire earlier and enter the labour market later o Increase in women' s labour market participation converging towards the male pattern Changing family structures a New family structures with more single person households o Increase in women's paid work implying less time for caring (elderly children a New social demands due to increase in number of lone parents 口 Child poverty U N I KASSEL VER SIT AT
4 Socio-economic context of pension reform Socio-demographic trends People live longer and get fewer children Changing labour markets Men retire earlier and enter the labourmarket later Increase in women’s labourmarket participation converging towards the male pattern Changing family structures New family structures with more single person households Increase in women’s paid work implying less time for caring (elderly & children) New social demands due to increase in number of lone parents Child poverty
Received comparisons: US-EU D European welfare states: innovative advanced a US welfare state laggard under-develo ped U N I KASSEL VER SIT AT
5 Received comparisons: US – EU European welfare states: innovative & advanced US welfare state: laggard & under-developed
Pension policy traditions a ' Bismarck'-style public pension plans Earnings-related contributions and benefits emphasising fiscal equivalence between contributions and benefits limited private provision of retirement benefits a Beveridge'-style public pension plans: Provision of basic, flat-rated pension with little or no emphasis on fiscal equivalence between contributions and benefits Significant provision of private retirement benefits U N I KASSEL VER SIT AT
6 Pension policy traditions ‘Bismarck’-style public pension plans: Earnings-related contributions and benefits emphasising fiscal equivalence between contributions and benefits. Limited private provision of retirement benefits ‘Beveridge’-style public pension plans: Provision of basic, flat-rated pension with little or no emphasis on fiscal equivalence between contributions and benefits. Significant provision of private retirement benefits
U.S. -EU15 comparison of pension policy traditions Bismarck'-style public Bismarck'-Lite Beveridge'-style public pension plan pension plan austria Italy Canada australia (Switzerland) belgium Luxembourg United States Denmark United Kingdom Finland (Norway) Ireland France Portugal Japan Germany Spain he Netherlands Greece Sweden New Zealand U N I KASSEL VER SIT AT
7 U.S. – EU15 comparison of pension policy traditions ‚Bismarck’-style public pension plan ‚Bismarck’-Lite ‚Beveridge’-style public pension plan Austria Italy Canada Australia (Switzerland) Belgium Luxembourg United States Denmark United Kingdom Finland (Norway) Ireland France Portugal Japan Germany Spain The Netherlands Greece Sweden New Zealand
Factors shaping retirement patterns a Pull factors: These primarily consist of financial incentives which are pullingolder workers into retirement a Push factors: These consist mainly of factors which restrict the available set of attractive job opportunities open to older workers and thus"push them into retirement U N I KASSEL VER SIT AT
8 Factors shaping retirement patterns Pull factors: These primarily consist of financial incentives which are “pulling” older workers into retirement. Push factors: These consist mainly of factors which restrict the available set of attractive job opportunities open to older workers and thus “push” them into retirement
Comparative literature mid 1990s a blondal and Scarpetta oEcd Project 口 Gruber and wise nber proⅰect U N I KASSEL VER SIT AT
Comparative literature mid 1990s Blöndal and Scarpetta OECD Project Gruber and Wise NBER Project 9
Table: Population and ageing trends-mid 2000s to 2050 United States EU15 Working age(25-54) 20%increase 12 %decline Elderly(65 and over)133%increase 75% increase U N I KASSEL VER SIT AT
Table: Population and ageing trends - mid 2000s to 2050 United States EU 15 Working age (25-54) 20 % increase 12 % decline Elderly (65 and over) 133 % increase 75 % increase 10