Aging in Asia Findings from New and Emerging Data Initiatives (2012) / Chapter Skim
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5 Facilitating Longer Working Lives: The Need, the Rationale, the How--David A. Wise
5 Facilitating Longer Working Lives: The Need, the Rationale, the How--David A. Wise
Pages 96-115
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From page 96... ...
A very similar paper was also presented at the Collogue sur l'Emploie des Seniors, organized by DARES, and held in Paris, October 14, 2010. The paper relies heavily on the International Social Security Project that I direct with results based on analyses by research teams in 12 countries.
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From page 97... ...
Third, the increase in tax revenues will increase the funds available to pay for increasing social security and health care costs. In addition, the increase in labor force participation at older ages would likely increase personal saving.
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From page 98... ...
. My concentration on the rationale is motivated by the belief that discussion of longer working lives must be predicated by discussion of why working longer is a plausible adjustment to the changing age structure of the population.
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From page 99... ...
THE RATIONALE For ease of exposition, much of this section is based on comparative data for the United States, France, the United Kingdom, and China. I begin by considering mortality trends and by documenting long-run trends in mortality.
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From page 100... ...
in Japan, the only Asian country participating in the International Social Security Project. Below, I compare equivalent mortality ages to equivalent self-assessed health ages, which may be closer to healthy equivalent ages.
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From page 101... ...
But as the mortality rate increases, the divergence across the countries increases. For example, at the age at which the mortality rate in each of the countries was 2.0%, the employment rates varied
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From page 102... ...
70 60 US 50 UK France 40 China 30 20 10 0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Mortality (percentage) FIGURE 5-4 Employment and mortality by age, United States, United Kingdom, and France, 2007, and China, 2005.
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From page 103... ...
The version of the data presented in Figure 5-5b for China is presented for the United States and for France in Figures 5-6 and 5-7, respectively. 100 8.0 Employment 1982 90 7.0 Employment 2005 80 Mortality 1982 6.0 Employment (percentage)
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From page 104... ...
For the United States, Figure 5-6 shows that in 2007, the mortality rate when 50% of men were employed was 2.7%; 30 years later in 2007, the mortality rate was only 1.5%, a decline of 1.2%. That is, for the employ
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From page 105... ...
In France, the employment rate at ages 62 and 63 declined by almost 30%. In addition, the mortality rate at these ages declined by about 1%, about the same as in the United States and somewhat less than in China.
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From page 106... ...
(2009) used HRS data to show a striking relationship at all ages between self-reported health status and death rates and between self-reported disability status and death rates.2 Mortality-Equivalent Ages Versus SAH-Equivalent Ages Figure 5-8 compares these two measures for the United States.
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From page 107... ...
status, 1970s and 2000s, Figure 5-8 United States. SOURCE: Milligan and Wise (2011)
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From page 108... ...
For the nine countries in the International Social Security Project with data on the proportion in fair or poor health (or 1 minus the proportion in better health) , there is a close relationship between the change in mortality and the change in SAH.
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From page 109... ...
The actual "observed" labor force participation -- that is, affected by Medicare eligibility and Social Security provisions -- is compared with the simulated participation that does not account for Medicare or for Social Security provisions. For both education groups, the simulated labor force participation is substantially higher than the observed rate -- 53 versus 35% for the high school or less group and 60 versus 38% for the any-college group.
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From page 110... ...
One might suppose that the increase in future retirement benefits would be at least large enough to offset the receipt of benefits for one fewer year. But in many countries, the present value of future social security benefits is reduced if the person works another year.
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From page 111... ...
consider a series of methods to estimate the relationship between the employment of older people and the employment of youth, based on the analyses of the authors in the countries participating in the International Social Security Project. I show an example of the evidence, adding to Figure 5-10 above.
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From page 112... ...
The evidence on pension plan provisions summarized above pertains to public pension systems, but these are not the only sys tems that contain incentives to leave the labor force early. Defined benefit systems in the private sector in the United States typically contain provi sions that strongly encourage early retirement (Stock and Wise, 1990a,b)
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From page 113... ...
But for mortality rates above 1.5%, employment for men in China is substantially greater than employment in the United States and much greater than employment in the United Kingdom
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From page 114... ...
I have emphasized three policy directions: removing public social security provisions that induce older people to leave the labor force; abandoning the boxed economy view of the labor market that is often used as an excuse, or rationale, for providing incentives for older people to leave the labor force; and removing private pension plan provisions that induce early retirement and developing flexible work arrangement for older workers. These results, based on developed countries including Japan, may have substantial implications for China.
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From page 115... ...
. Social Security Programs and Retirement Around the World: Historical Trends in Mortality and Health, Employment, Disability Insurance Participation and Reforms-Introduction and Summary.
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