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Holger Luthen - One of the best experts on this subject based on the ideXlab platform.
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the rising longevity gap by Lifetime Earnings distributional implications for the pension system
The journal of the economics of ageing, 2020Co-Authors: Peter Haan, Daniel Kemptner, Holger LuthenAbstract:Abstract This study uses German social security records to provide novel evidence on cohort trends of the heterogeneity in life expectancy by Lifetime Earnings and, additionally, documents the distributional implications of this Earnings-related heterogeneity. We find a strong association between Lifetime Earnings and life expectancy at age 65 and show that the longevity gap is increasing across cohorts. For West German male employees born 1926–28, the longevity gap between top and bottom decile amounts to about 4 years (about 30%). This gap increases to 7 years (almost 50%) for cohorts 1947–49. We extend our analysis to the household context and show that Lifetime Earnings are also related to the life expectancy of the spouse. The heterogeneity in life expectancy has sizable and relevant distributional consequences for the pension system: when accounting for heterogeneous life expectancy, we find that the German pension system is regressive despite a strong link between benefits and prior contributions. We show that the internal rate of return of the pension system increases with Lifetime Earnings. Finally, we document an increase of the regressive structure across cohorts, which is consistent with the increasing longevity gap.
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the rising longevity gap by Lifetime Earnings distributional implications for the pension system
Social Science Research Network, 2017Co-Authors: Peter Haan, Daniel Kemptner, Holger LuthenAbstract:This study uses German social security records to provide novel evidence about the heterogeneity in life expectancy by Lifetime Earnings and, additionally, documents the distributional implications of this Earnings-related heterogeneity. We find a strong association between Lifetime Earnings and life expectancy at age 65 and show that the longevity gap is increasing across cohorts. For West German men born 1926-28, the longevity gap between top and bottom decile amounts to about 4 years (about 30%). This gap increases to 7 years (almost 50%) for cohorts 1947-49. We extend our analysis to the household context and show that Lifetime Earnings are also related to the life expectancy of the spouse. The heterogeneity in life expectancy has sizable and relevant distributional consequences for the pension system: when accounting for heterogeneous life expectancy, we find that the German pension system is regressive despite a strong contributory link. We show that the internal rate of return of the pension system increases with Lifetime Earnings. Finally, we document an increase of the regressive structure across cohorts, which is consistent with the increasing longevity gap.
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the increasing longevity gap by Lifetime Earnings and its distributional implications
Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking, 2017Co-Authors: Daniel Kemptner, Peter Haan, Holger LuthenAbstract:We use social security records to document heterogeneity in life expectancy by Lifetime Earnings and we analyze how this longevity gap has evolved over cohorts. We provide evidence that the Earnings-related longevity gap is increasing over cohorts in West Germany. Further, we propose a decomposition to disentangle the role of increasing Earnings inequality over cohorts and the effect of changes in the Earnings gradient. Finally, we study the distributional implications for the pension system.
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Lifetime Earnings inequality in germany
Journal of Labor Economics, 2015Co-Authors: Timm Bonke, Giacomo Corneo, Holger LuthenAbstract:This paper documents the magnitude, pattern, and evolution of Lifetime Earnings inequality in Germany. Based on a large sample of earning biographies from social security records, we show that the intra-generational distribution of Lifetime Earnings of male workers has a Gini coefficient around .2 for cohorts born in the late 1930s and early 1940s; this amounts to about 2/3 of the value of the Gini coefficient of annual Earnings. Within cohorts, mobility in the distribution of yearly Earnings is substantial at the beginning of the lifecycle, decreases afterwards and virtually vanishes after age forty. Earnings data for thirty-one cohorts reveals striking evidence of a secular rise of intra-generational inequality in Lifetime Earnings: West-German men born in the early 1960s are likely to experience about 80 % more Lifetime inequality than their fathers. In contrast, both short-term and long-term intra-generational mobility have been rather stable. Longer unemployment spells of workers at the bottom of the distribution of younger cohorts contribute to explain 30 to 40 % of the overall increase in Lifetime Earnings inequality.
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Lifetime Earnings inequality in germany
Journal of Labor Economics, 2015Co-Authors: Timm Bonke, Giacomo Corneo, Holger LuthenAbstract:We employ German social security records to investigate intragenerational Lifetime Earnings inequality and mobility of yearly Earnings for 35 cohorts, starting with the birth year 1935. Our main result is a striking secular rise of intragenerational inequality in Lifetime Earnings: West German men born in the early 1960s are likely to experience about 85% more Lifetime inequality than their fathers. In contrast, both short-term and long-term intragenerational mobility are stable. Longer unemployment spells of workers at the bottom of the distribution of younger cohorts contribute to explaining 20%–40% of the overall increase in Lifetime Earnings inequality.
Kjell G Salvanes - One of the best experts on this subject based on the ideXlab platform.
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life cycle bias and the returns to schooling in current and Lifetime Earnings
Research Papers in Economics, 2011Co-Authors: Manudeep Bhuller, Magne Mogstad, Kjell G SalvanesAbstract:This paper uses a unique data set with nearly career-long Earnings histories to provide evidence on the returns to schooling in current and Lifetime Earnings. We use these results to assess the importance of life-cycle bias in Earnings regressions using current Earnings as a proxy for Lifetime Earnings. To account for the endogeneity of schooling, we apply three commonly used identification strategies. Our estimates demonstrate a strong life-cycle bias, often exceeding the bias from assuming that schooling is exogenous. We further explore the problems caused by life-cycle bias in research on the economic returns to schooling, and discuss possible remedies.
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life cycle bias and the returns to schooling in current and Lifetime Earnings
Social Science Research Network, 2011Co-Authors: Manudeep Bhuller, Magne Mogstad, Kjell G SalvanesAbstract:The project is part of the research activities at the ESOP center at the Department of Economics, University of Oslo. ESOP is supported by the Research Council of Norway. An earlier version of this paper was circulated as NHH Discussion Paper 2011/4, dated February 29, 2011.
Steven J Haider - One of the best experts on this subject based on the ideXlab platform.
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life cycle variation in the association between current and Lifetime Earnings
The American Economic Review, 2006Co-Authors: Steven J Haider, Gary SolonAbstract:Researchers in a variety of important economic literatures have assumed that current income variables as proxies for Lifetime income variables follow the textbook errors-in-variables model. In our analysis of Social Security records containing nearly career-long Earnings histories for the Health and Retirement Study sample, we find that the relationship between current and Lifetime Earnings departs substantially from the textbook model in ways that vary systematically over the life cycle. Our results can enable more appropriate analysis of, and correction for, errors-in-variables bias in any research that uses current Earnings to proxy for Lifetime Earnings. (JEL D31, D91)
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life cycle variation in the association between current and Lifetime Earnings
National Bureau of Economic Research, 2006Co-Authors: Steven J Haider, Gary SolonAbstract:Researchers in a variety of important economic literatures have assumed that current income variables as proxies for Lifetime income variables follow the textbook errors-in-variables model. In an analysis of Social Security records containing nearly career-long Earnings histories for the Health and Retirement Study sample, we find that the relationship between current and Lifetime Earnings departs substantially from the textbook model in ways that vary systematically over the life cycle. Our results can enable more appropriate analysis of and correction for errors-in-variables bias in a wide range of research that uses current Earnings to proxy for Lifetime Earnings.
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Earnings instability and Earnings inequality of males in the united states 1967 1991
Journal of Labor Economics, 2001Co-Authors: Steven J HaiderAbstract:Although much research has focused on recent increases in annual Earnings inequality in the United States, the increases could have come from either of two sources: the distribution of Lifetime Earnings could have become more unequal or the receipt of Lifetime Earnings could have become more unstable. Based on an analysis of the 1968–92 Panel Study of Income Dynamics, we find that Lifetime Earnings inequality increased during the early 1980s and that Earnings instability increased during the 1970s. We also examine how these trends are related to changes in the distribution of wages and hours and the returns to education.
Daniel Johnson - One of the best experts on this subject based on the ideXlab platform.
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Lifetime Earnings discount rate ability and the demand for post compulsory education in men in england and wales
Social Science Research Network, 2002Co-Authors: Daniel JohnsonAbstract:Human capital theory suggests educational investments are made based on expected returns over the Lifetime. Most other work in this field, particularly using British data, is based on demand models estimated in reduced form, with no Earnings measures, or crudely constructed Earnings measures, based on one or two Earnings observations per individual. We present a structural model of demand for educational investment which includes estimates of Earnings paths for educational options as determinants of educational choice. This provides us with directly interpretable parameter estimates. The discount rate is also determined within our demand model. Ability controlled Earnings profiles are estimated by matching individuals from the General Household Survey to individuals in similar occupations from the National Child Development Survey (NCDS). Our results show that expected Earnings profiles vary according to observed ability and educational choice. Results from the demand model show that expected Lifetime Earnings have a significant impact on educational choice. Other socio-demographic factors, particularly social class, also exhibit significant influences on the education decision. We estimate the discount rate to be lower than reported in other studies.
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Lifetime Earnings discount rate ability and the demand for post compulsory education in men in england and wales
Bulletin of Economic Research, 2002Co-Authors: Daniel JohnsonAbstract:Human capital theory suggests educational investments are made based on expected returns over the Lifetime. Most other work in this field, particularly using British data, is based on demand models estimated in reduced form, with no Earnings measures, or crudely constructed Earnings measures, based on one or two Earnings observations per individual. We present a structural model of demand for educational investment which includes estimates of Earnings paths for educational options as determinants of educational choice. This provides us with directly interpretable parameter estimates. The discount rate is also determined within our demand model. Ability controlled Earnings profiles are estimated by matching individuals from the General Household Survey to individuals in similar occupations from the National Child Development Survey (NCDS). Our results show that expected Earnings profiles vary according to observed ability and educational choice. Results from the demand model show that expected Lifetime Earnings have a significant impact on educational choice. Other socio-demographic factors, particularly social class, also exhibit significant influences on the education decision. We estimate the discount rate to be lower than reported in other studies. Copyright 2002 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research
Thomas L. Steinmeier - One of the best experts on this subject based on the ideXlab platform.
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How Effective is Redistribution Under the Social Security Benefit Formula
Journal of Public Economics, 2001Co-Authors: Alan L. Gustman, Thomas L. SteinmeierAbstract:This paper uses Earnings histories from the Social Security Administration, linked to the survey responses for participants in the Health and Retirement Study, to investigate redistribution under the current social security benefit formula. As advertised, own benefits are significantly redistributed from individuals with high to those with low Lifetime Earnings. However, redistribution is roughly halved when spouse and survivor benefits are taken into account and redistribution is measured among families. When families are arrayed by total Earnings during years when both spouses are engaged in substantial work, there is very little redistribution from families with high to low Earnings capacity.
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how effective is redistribution under the social security benefit formula
National Bureau of Economic Research, 2000Co-Authors: Alan L. Gustman, Thomas L. SteinmeierAbstract:This paper uses Earnings histories obtained from the Social Security Administration and linked to the survey responses for participants in the Health and Retirement Study to investigate redistribution under the current social security benefit formula. We find that as advertised, at the level of the individual respondent, the benefit formula is progressive. When individuals are arrayed by indexed Lifetime Earnings, own benefits are significantly redistributed from those with high Lifetime Earnings to those with low Lifetime Earnings. However, much of this apparent redistribution is from men to women, and when examined at the level of the family, from primary to secondary earners. When families are arrayed according the total Lifetime Earnings, and spouse and survivor benefits are taken into account, the extent of redistribution from families with high Lifetime Earnings to families with low Lifetime Earnings is roughly halved. Much of the remaining redistribution is from families where both spouses spend much of their potential work lives in the labor market, to families where a spouse, often with high Earnings potential, chooses to spend a significant number of years outside of the labor force. When families are arrayed by their Earnings potential, that is Earnings during years when both spouses are engaged in substantial work, there is very little redistribution from families with high to low Earnings capacity. Accordingly, at least for families on the verge of retirement today, introducing a simple system of privatized or other individual accounts, i.e., a system that ignored issues of redistribution, would have no major effect on the distribution of social security benefits net of taxes among families with different Earnings capacities. Moreover, although privatized or other individual accounts would reduce redistribution from two earner to one earner families, the extent of that redistribution is greatly exaggerated when one compares benefits among individuals arrayed according to Lifetime Earnings.
