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Title: Topics on economics of ageing : adequacy of saving for retirement, pension reform and retirement patterns
Author: Aguila Vega, Emma.
Awarding Body: University College London (University of London)
Current Institution: University College London (University of London)
Date of Award: 2006
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This research analyses three of the main topics on Economics of Ageing relevant for the debate on public policies for old age. The first section analyses the most recent proposal of pension reform from a pay-as-you-go to a fully funded system with personal accounts and its impact on household consumption and saving. This particular type of pension reform has been encouraged by policymakers under the premise that it promotes private savings. However, this thesis provides evidence from the Mexican case which could contradict that assumption. The main results show that the Mexican pension reform increased consumption and crowded out savings of low income workers, who are the majority of population affected by the public policy. These findings are consistent with the predictions of the Life Cycle model, as the theoretical analysis shows that the pension reform caused an increase in after tax labour income and pension wealth particularly for low income employees. The empirical evaluation is conducted using a nonparametric difference-indifferences estimator implemented with propensity score matching. The second section studies whether pension systems provide incentives for early retirement. In developed countries, labour force participation around retirement age has declined in the past decades. The financial sustainability of pension systems not only bears the demographic trends of an ageing population with higher life expectancies but individuals are retiring at younger ages. Recent studies illustrate that these phe-nomena are also emerging in developing countries. This thesis finds evidence that the pension scheme provides incentives to retire early for the Mexican case. Finally, the third section is on the adequacy of saving for retirement. Previous empirical literature has found a sharp decline in consumption during the first years of retirement implying that individuals do not save enough for their retirement. This phenomenon has been called the retirement consumption puzzle. In contrast to some of the previous studies, we find no conclusive evidence of the retirement consumption puzzle in the US during the first year of retirement. Consumption is defined as nondurable expenditure, a more comprehensive measure than only food used in many of the previous studies. Food expenditure around retirement decreases The latter could be explained by a reallocation of the budgets hares after retirement to adjust to a new life style. These results suggest that food expenditure is not an accurate measure to test the Life Cycle Model.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available