In the late 1990s and into the early 2000s, Germany was often called "the sick man of Europe." Indeed, Germany's economic growth averaged only about 1.2 percent per year from 1998 to 2005, including a recession in 2003, and unemployment rates rose from 9.2 percent in 1998 to 11.1 percent in 2005. Today, after the Great Recession, Germany is described as an "economic superstar." In contrast to most of its European neighbors and the United States, Germany experienced almost no increase in unemployment during the Great Recession, despite a sharp decline in GDP in 2008 and 2009. Germany's exports reached an all-time record of $1.738 trillion in 2011, which is roughly equal to half of Germany's GDP, or 7.7 percent of world exports. Even the euro crisis seems not to have been able to stop Germany's strengthening economy and employment. How did Germany, with the fourth-largest GDP in the world transform itself from "the sick man of Europe" to an "economic superstar" in less than a decade? We present evidence that the specific governance structure of the German labor market institutions allowed them to react flexibly in a time of extraordinary economic circumstances, and that this distinctive characteristic of its labor market institutions has been the main reason for Germany's economic success over the last decade.

/pdf/from-sick-man-of-europe-to-economic-superstar-germany-s-2sr32ygoz4.pdf

From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy

This paper presents new empirical evidence in support of the view that a significant fraction of total saving is motivated solely by the desire to leave bequests. Specifically, I find that Social Security annuity benefits significantly raise life insurance holdings and depress private annuity holdings among elderly individuals. These patterns indicate that the typical household would choose to maintain a positive fraction of its resources in bequeathable forms, even if insurance markets were perfect. Evidence on the relationship between insurance purchases and total resources reinforces this conclusion.

How Strong are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities

We investigate the fiscal impact of immigration on the UK economy, with a focus on the period since 1995. Our findings indicate that, when considering the resident immigrant population in each year from 1995 to 2011, immigrants from the European Economic Area (EEA) have made a positive fiscal contribution, even during periods when the UK was running budget deficits, while Non-EEA immigrants, not dissimilar to natives, have made a negative contribution. For immigrants that arrived since 2000, contributions have been positive throughout, and particularly so for immigrants from EEA countries. Notable is the strong positive contribution made by immigrants from countries that joined the EU in 2004.

/pdf/the-fiscal-effects-of-immigration-to-the-uk-4pa4lcs0ds.pdf

The Fiscal Effects of Immigration to the UK

One purpose of this report then is to look at past current and projected numbers proportions and growth rates of older populations. Older populations also have increased because of worldwide improvements in health services educational status and economic development. The characteristics of older people are likely to be increasingly heterogeneous within nations. A second purpose of An Aging World: 2008 is to summarize socioeconomic statistics for both developed and developing nations. Comparable data are included for as many as 52 nations when the categories are reasonably consistent. In 2008 these 52 nations (Appendix Table B-1) contained 77 percent of the world’s total population. (Excerpt)

An aging world: 2008.

This paper investigates the effects of retirement on various health outcomes Data stem from the first three waves of the English Longitudinal Study of Ageing (ELSA) With these informative data, non-parametric matching and instrumental variable (IV) methods are applied to identify causal effects It is found that retirement significantly increases the risk of being diagnosed with a chronic condition In particular, it raises the risk of a severe cardiovascular disease and cancer This is also reflected in increased risk factors (eg BMI, cholesterol, blood pressure) and increased problems in physical activities Furthermore, retirement worsens self-assessed health and an underlying health stock

Does retirement trigger ill health

This Briefing Note describes state pension provision in the United Kingdom from the inception of the basic state pension in 1948, following the Beveridge Report, to Pensions Act 2007 and the plans of the Conservative/Liberal Democrat coalition government. The main objective is to provide a comprehensive description of the rules that currently determine pension benefits as well as those that have been in place in the past. However, we also provide a brief historical overview of the dilemmas facing policymakers when contemplating pension reforms and a summary of the most recent reforms. The history of the UK pension system is the story of a mainly non-contributory system, periodically tempted by the higher replacement rate of social insurance schemes, but always frightened once the costs become apparent. Recent reforms have tilted the system further in the direction of a universal flat-rate benefit, abandoning any social insurance design. This confirms that the main objective of the UK state pension system is to reduce poverty at old age. These flat-rate pensions will also reduce the reliance of the system on means-tested benefits, somewhat reinforcing the Beveridgean design of the system. Given these clarifications, it is unfortunate that the latest reforms have still sought to maintain much of the complex structure of the pre-existing system instead of reforming and rationalising it. However, once issues of transition have been dealt with, there may yet be scope for simplifying the presentation of the rules. * This paper was funded by the ESRC Centre for the Microeconomic Analysis of Public Policy at the Institute for Fiscal Studies (RES-544-28-5001). The authors would like to thank Carl Emmerson for useful comments on an earlier draft of this Briefing Note and Judith Payne for copy-editing. All remaining errors are the responsibility of the authors.

/pdf/the-history-of-state-pensions-in-the-uk-1948-to-2010-2ujsdpo76k.pdf

The history of state pensions in the UK: 1948 to 2010

Signals matter? Large retirement responses to limited financial incentives

/pdf/prepared-for-retirement-the-adequacy-and-distribution-of-2nxviqrhuf.pdf

Prepared for retirement? : The adequacy and distribution of retirement resources in England

In this chapter, we review the evidence on retirement and study the role of incentives in the retirement decision. The key patterns of withdrawal from the labor market are presented and some of the factors that might explain the large and discrete drops in hours of work at the point of “retirement” are presented. We study the main retirement incentives that individuals face and place these financial and other incentives in the context of a structural approach to modeling retirement. We use this approach to frame issues of how government and private pension schemes affect retirement behavior. Noting that the typical household nearing retirement today in most developed economies is one in which both husband and wife work, we examine the theory and evidence on modeling incentives in couples and for joint decision-making. We conclude with a discussion of some of the gaps in our understanding of the employment of the elderly and raise some central questions that should be addressed by future research.

Retirement incentives and labor supply

In 1995, the UK government legislated to increase the earliest age at which women could claim a state pension from 60 to 65 between April 2010 and March 2020. This paper uses data from the first two years of this change coming into effect to estimate the impact of increasing the state pension age from 60 to 61 on the employment of women and their partners using a difference-in-differences methodology. Our methodology controls in a flexible way for underlying differences between cohorts born at different times. We find that women’s employment rates at age 60 increased by 7.3 percentage points when the state pension age was increased to 61 or, equivalently, it increased average retirement age by about one month. Their probability of unemployment increased by 1.3 percentage points. The employment rates of the male partners also increased by 4.2 percentage points. The magnitude of these effects, and the results from subgroup analysis, suggest they are more likely explained by the increase in the state pension age being a shock or through it having a signalling effect rather than them being due to either credit constraints or the effect of individuals responding to changes in their financial incentives to work. Taken together, our results suggest that the fiscal strengthening arising from a one-year increase in the female state pension age is 10% higher than a costing based on no behavioural change, due to additional direct and indirect tax revenues arising from increased earnings.

/pdf/incentives-shocks-or-signals-labour-supply-effects-of-45n93wgc6f.pdf

Gemma Tetlow

Papers

The history of state pensions in the UK: 1948 to 2010

Signals matter? Large retirement responses to limited financial incentives

Prepared for retirement? : The adequacy and distribution of retirement resources in England

Retirement incentives and labor supply

Incentives, shocks or signals: labour supply effects of increasing the female state pension age in the UK