Current Working Papers
The affluency to quit: How inheritances affect retirement plannings
(with Tobias Crusius)
Abstract:This study uses the German SAVE panel study in order to estimate the effect of intergenerational
transfers on the expected retirement entry age of individuals. The literature in this field typically estimates
the transfer effect on the actual retirement probability. We suggest to base the analysis on the expected
retirement age instead. This entails two methodological advantages: First, it is possible to exploit the
within individual variation for the entire sample (even of those who do not retire) and thereby permits to
analyze the life-cycle considerations of younger age groups. Second, the effect size can easily be expressed
in terms of time and thereby monetary opportunity costs. We find that heirs expect to retire earlier, even
when receipts are expected to some degree. Specifically, heirs plan to retire four to five months earlier and
thereby accept costs in the form of foregone income and pension entitlements corresponding to 20-30% of
the inheritance.
Refereed Publications
Tracking and the Intergenerational Transmission of Education: Evidence from a Natural Experiment
(with Simon Lange): Economics of Education Review, Vol. 61 (2017), 59-78.
Abstract: Proponents of tracking argue that the creation of more homogeneous classes increases
effciency while opponents point out that tracking aggravates initial differences between
students. We estimate the effects on the intergenerational transmission of education of a
reform that delayed tracking by two years in one of Germany's federal states. While the
reform had no effect on educational outcomes on average, it increased educational attainment
among individuals with uneducated parents and decreased attainment among individuals
with educated parents. The decrease in the gap is is driven entirely males and to a large
extent by an effect on the likelihood to complete the academic secondary track.
How inheritances shape wealth distributions: An international comparison
(with Timm Bönke und Christian Westermeier): Economics Letters, Vol. 159 (2017), 217-220.
Abstract: We use data from the European Household Finance and Consumption Survey in order to examine the
distributional effect of intergenerational wealth transfers on the net worth distribution in 8 European
countries and compare it to recent findings for the US. To do so, we resort to the decomposition of the
coefficient of variation as suggested and applied by Wolff (1987, 2002, 2015) and Wolff and Gittleman
(2014). The results seem to imply that inheritances and gifts have a vastly equalizing effect on inequality
in household wealth in all 8 countries.
Inequality in Active Ageing: Evidence from a new individual-level index for European countries
(with Mikkel Barslund and Asghar Zaidi): Ageing and Society (2017)
Abstract:In the context of challenges associated with population ageing, the promotion of active ageing is central to formulation of social policies. While there is much discussion about active ageing at the aggregate country level, little is known about the inequality in active ageing within countries providing relevant complementary information to guide policy choices. This paper analyses inequality in experiences of active ageing among individuals across selected European countries. Using data from SHARE, a new individual-level composite index of active ageing is constructed, which closely corresponds to existing efforts of comparative EU-wide research on the Active Ageing Index. An important motivation is that it allows for an understanding of unequal experiences of ageing, which may otherwise be masked in aggregate level measures of active ageing. The individual-level index makes feasible comparisons of active ageing outcomes for subgroups to facilitate the identification of public policy priorities. Likewise, studying the development of inequality over time is fundamental to assessing whether progress in active ageing is happening in an inclusive manner or whether inequality persists across different segments of society. Our results covering 15 European countries point to large differences in the distribution of active ageing scores across individuals. A positive association exists between the country-level macro Active Ageing Index and the inequality observed in the micro, individual-level index within a country. Thus, countries ranked lower on the macro Active Ageing Index tend to have the most unequal distribution in active ageing experiences, implying that greater targeting efforts are required in these countries to reach those furthest behind. For the nine European countries where temporal data are also available, inequality in active ageing outcomes decreased in the period 2004 to 2013, an important finding given the economic turmoil and financial austerity during this period.
Measuring Dependecy Ratios using National Transfer Accounts
(with Mikkel Barslund): Vienna Yearbook of Population Research, Vol. 14 (2016), 155-185.
Abstract: It is now widely recognised that traditional demographic dependency ratios (DDRs), such as the old-age dependency ratio relating the number of people aged 65+ to the working-age population, provide a poor measure of the socio-economic changes that ageing societies will bring about. In the future, older generations will have increasingly better health and are likely to work longer. By combining population projections and National Transfer Accounts (NTA) data for seven European countries, we project the quantitative impact of ageing on public finances until 2040 and compare it to projected DDRs. We then simulate the public finance impact of changes in three key indicators related to the policy responses to population ageing – net immigration, healthy ageing and longer working lives – by linking age-specific public-health transfers and labour-market participation rates to changes in mortality. Four main findings emerge: first, the simple old-age dependency ratio overestimates the future public finance challenges faced by the countries studied – significantly so for some countries, e.g. Austria, Finland and Hungary. Second, healthy ageing has a modest effect (on public finances) except in the case of Sweden, where it is substantial. Third, the long-run effect of immigration is well captured by the simple DDR measure if immigrants are similar to the native population. Finally, increasing the length of working lives is central to addressing the public finance challenge of ageing. Extending the length of working lives by three to four years over the next 25 years – equivalent to the increase in life expectancy – severely limits the impact of ageing on public transfers.
Vienna Yearbook of Population Research
Policy Papers
Measuing ageing and the need for longer working lives in the EU
(with Mikkel Barslund)
Abstract: This study considers different ways of measuring the ageing of societies and their implications for public policy. The first part characterises the ongoing ageing of the population in the EU28 by relating it to past and future longer-term demographic trends for broad groups of countries. It goes beyond traditional chronological measures to include recently suggested prospective measures of ageing. The second part of the study is concerned with economic dependency ratios, which are a more relevant measure for summarising the economic challenges related to ageing. Three main findings emerge: first, prospective indicators of ageing reveal the challenge of population ageing to be less onerous than traditional chronological measures would suggest. Their relevance, however, will depend on the degree to which policy changes can respond to the changing age structure of the population. Second, substantial increases in the length of working lives are necessary to maintain current economic dependency ratios. Taking a year-2000 perspective on the economic challenges of ageing shows that substantial progress has been made. Third, looking towards 2050, education will have limited direct impact on the scale of the ageing challenge.
Extending Working Life in Finland
(with Anna-Elisabeth Thum)
Abstract: This report reviews national and private initiatives to allow the elderly to continue their participation in the Finnish labour market and provides an analysis of the labour market and living conditions of seniors. We are interested in how those over 50 can be engaged in various forms of employment and lifelong learning. We find strong evidence that Finland generally provides good institutional conditions for active ageing. The quick and early ageing process was tackled by the fundamental pension reform that already prolonged retirement substantially and will probably facilitate later retirement as the attitudes concerning retirement change. On the other hand, Finland still seems to lag behind the other Nordic welfare states, has considerable problems in providing the same health conditions to low educated people in physically demanding occupations and could - – with respect to family pension in particular – invest further efforts in reforming the pension system. While many of the reforms Finland has conducted seem to be favourable and transferable to other European countries that still face the steepest phases of ageing in their societies, a reluctance towards changing attitudes that we observe in Finland, shows that organizing active ageing is a long-term project.
Work in Progress
Intergenerational Transfers: How do they affect inequality in wealth?
Abstract: This paper uses SOEP data to study the distributional effect of intergenerational transfers on
the wealth distribution of German households. Similar to most other central European countries,
Germany faces a period of increasing aggregate bequest flows. This study adds to the ongoing debate
on the distributional implications of such wealth shocks: I estimate the propensity to save from
intergenerational transfers over the wealth distribtion and retrace the distributional repercussions of
heterogeneous consumption out of transfers. The results resemble previous findings from the literature:
While the propensity to consume from transfers differs over the wealth distribution, these differences do
not overturn the general finding of transfers equalizing the relative inequality in household wealth.