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Redistributive effects of different pension systems when longevity varies by socioeconomic status.

ABSTRACT: We propose a general analytical framework to model the redistributive features of alternative pension systems when individuals face ex ante differences in mortality. Differences in life expectancy between high and low socioeconomic groups are often large and have widened recently in many countries. Such longevity gaps affect the actuarial fairness and progressivity of public pension systems. However, behavioral responses to longevity and policy complicate analysis of possible reforms. Here we consider how various pension systems would perform in an OLG setting with heterogeneous longevity and ability. We evaluate redistributive effects of three Notional Defined Contribution plans and three Defined Benefit plans, calibrated on the US case. Compared to a benchmark non-redistributive plan that accounts for differences in mortality, US Social Security reduces regressivity from longevity differences, but would require group-specific life tables to achieve progressivity. Moreover, without separate life tables, despite apparent accounting gains, lower income groups would suffer welfare losses and higher income groups would enjoy welfare gains through indirect effects of pension systems on labor supply.

SUBMITTER: Sanchez-Romero M

PROVIDER: S-EPMC7351074 | biostudies-literature | 2020 Oct

REPOSITORIES: biostudies-literature

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Redistributive effects of different pension systems when longevity varies by socioeconomic status.

Sanchez-Romero Miguel M Lee Ronald D RD Prskawetz Alexia A

Journal of the economics of ageing 20200428

We propose a general analytical framework to model the redistributive features of alternative pension systems when individuals face ex ante differences in mortality. Differences in life expectancy between high and low socioeconomic groups are often large and have widened recently in many countries. Such longevity gaps affect the actuarial fairness and progressivity of public pension systems. However, behavioral responses to longevity and policy complicate analysis of possible reforms. Here we co ...[more]

PMID: 32656070

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Project description:BackgroundOlder people in low- and middle-income countries are more susceptible to the impact of childhood experiences. This study comprehensively examines how childhood socioeconomic status (SES) and adult SES collectively influence late-life healthy longevity from a life course perspective, providing insights for shaping health-related policies.MethodsThis study analyzed data from the Chinese Longitudinal Healthy Longevity Survey (1998-2018) with 37,264 individuals aged 65 and above. Using R software, we applied continuous-time multi-state models incorporating the Rockwood frailty index with 38 indicators to assess participants' health. Childhood SES or life course SES trajectories were core explanatory variables, while age and gender were controlled. Multinomial regression estimated annual transition probabilities between different states, and the multi-state life table method calculated total and frailty-specific life expectancy (LE).Results(1) Social mobility among older people in China showed an upward trend from childhood to adulthood. (2) Transition probabilities for robust-frailty, robust-dead, and frailty-dead increased with age, while frailty-robust decreased. Transition probabilities and LE varied across different childhood SES (low, medium, high) or life-course SES trajectory categories (low-low, low-medium, low-high, medium-low, medium-medium, medium-high, high-low, high-medium, high-high), with probabilities of robust-frailty, robust-dead, and frailty-dead decreasing sequentially across different categories, and frailty-robust increasing sequentially across different categories. Total LE, robust LE, and robust LE proportion increased sequentially across different categories, while frailty LE decreased sequentially across different categories. (3) Women had higher total LE and frailty incidence, but lower recovery rate, mortality risk, robust LE, and robust LE proportion compared to men.ConclusionFavorable childhood SES and lifelong accumulation of SES advantages protect against frailty morbidity, improve recovery rate, reduce mortality risk, and increase total LE, robust LE, and robust LE proportion. High childhood SES has a stronger protective effect than high adult SES, indicating the lasting impact of childhood conditions on healthy longevity. Systematic interventions in education, food supply, and medical accessibility for children from impoverished families are crucial.

Project description:Which are the effects of pandemics on the returns to factors of production? Are these effects persistent over time? These questions have received renewed interest after the out-burst of deaths caused by Covid-19. The Spanish Flu is the closest pandemic to Covid-19. In this paper, we analyze the impact of the Spanish Flu on the returns to labor and capital in Spain. Spain is an ideal country to perform this exercise. First, the "excess death rate" was one of the largest in Western Europe and it varied substantially across regions. Second, Spain was transitioning towards industrialization, with regions in different stages of development. Third, Spain was developed enough to have reliable data. We identify the effect of the Spanish Flu by exploiting within-country variation in "excess death rate". Our main result is that the effect of the Spanish Flu on daily real wages was large, negative, and broadly short-lived. The effects are heterogeneous across occupations and regions. The negative effects are exacerbated in (i) occupations producing non-essential goods like shoemakers and (ii) more urbanized provinces. Quantitatively, relative to pre-1918, the decline for the average region ranges from null to around 30 percent. In addition, we fail to find significant negative effects of the flu on returns to capital. Whereas the results for dividends are imprecisely estimated (we cannot reject a null effect), the effect on real estate prices (houses and land), driven by the post-1918 recovery, is positive. Experts on inequality have argued that pandemics have equalizing effects especially in a Malthusian setting, due to real wage increases. Our findings suggest that, at least, for a developing economy like Spain in the early 20th century, this result does not apply. Indeed, we document that the flu pandemic was conducive to a (short-run) reduction in real wages. In addition, we interpret our heterogeneous results as suggestive evidence that pandemics represent a demand shock.

Project description:BackgroundSubjective "ladder" measurements of socio-economic status (SES) are easy-to-administer tools that ask respondents to rate their own SES, allowing them to evaluate their own material resources and determine where it places them relative to their community. Here, we sought to compare the MacArthur Scale of Subjective Social status to the WAMI, an objective measure of SES that includes data on water and sanitation, asset ownership, education, and income.MethodsLeveraging a study of 595 tuberculosis patients in Lima, Peru, we compared the MacArthur ladder score to the WAMI score using weighted Kappa scores and Spearman's rank correlation coefficient. We identified outliers that fell outside the 95th percentile and assessed the durability of the inconsistencies between scores by re-testing a subset of participants. We then used Akaike information criterion (AIC) to compare the predictability of logistic regression models evaluating the association between the two SES scoring systems and history of asthma.ResultsThe correlation coefficient between the MacArthur ladder and WAMI scores was 0.37 and the weighted Kappa was 0.26. The correlation coefficients differed by less than 0.04 and the Kappa ranged from 0.26 to 0.34, indicating fair agreement. When we replaced the initial MacArthur ladder scores with retest scores, the number of individuals with disagreements between the two scores decreased from 21 to 10 and the correlation coefficient and weighted Kappa both increased by at least 0.03. Lastly, we found that when we categorized WAMI and MacArthur ladder scores into three groups, both had a linear trend association with history of asthma with effect sizes and AICs that differed by less than 15% and 2 points, respectively.ConclusionOur findings demonstrated fair agreement between the MacArthur ladder and WAMI scores. The agreement between the two SES measurements increased when they were further categorized into 3-5 categories, the form in which SES is often used in epidemiologic studies. The MacArthur score also performed similarly to WAMI in predicting a socio-economically sensitive health outcome. Researchers should consider subjective SES tools as an alternative method for measuring SES, particularly in large health studies where data collection is a burden.

Project description:BackgroundThe purpose of this paper is to systematically review the literature on the relationship between socioeconomic status (SES) and influenza immunization and to examine how certain measures of SES may influence interpretations of this relationship.MethodsWe conducted a systematic review of existing peer-reviewed literature to evaluate the above relationship in the general population. Electronic databases (MEDLINE and EMBASE) were searched from January 2012 to May 2017 to identify English-language studies relevant to this review. Studies were included where influenza vaccination was explicitly reported as the dependent variable and SES as the independent variable. We limited our review to measures of SES that focus on education, income, social class, occupation, and deprivation. Studies that measured SES using other variables (e.g., race, ethnicity, geographic location, rural or urban status, or insurance status) were excluded. Studies were also excluded if they did not report on the human population or did not analyze original data. The population of interest included all age groups, levels of health status, and sociodemographic backgrounds. The review was also limited to World Bank high-income countries. Two authors independently screened full-text articles after obtaining a Kappa score of K = 0.867. The methodological quality of manuscripts was assessed using the appraisal tools developed by the Joanna Briggs Institute. Results were qualitatively reported and synthesized.ResultsOf the 42 articles included in this review, 52.4% (n = 22) found that higher levels of SES resulted in higher levels of influenza vaccination; 4.5% (n = 2) reported a negative association; and 14.3% (n = 6) found no association. Just over a quarter (26.2%, n = 12) of articles reported mixed results.ConclusionsThere was consistently a relationship between SES and influenza immunization, which varied according to how SES was measured. It is recommended that authors be explicit in defining the SES concept they are trying to capture and that they utilize multiple measures of SES (e.g., education, income, class).

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Redistributive effects of different pension systems when longevity varies by socioeconomic status.

Publications

Redistributive effects of different pension systems when longevity varies by socioeconomic status.

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