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Projecting A Life-Cycle Income - A Simulation Model For The Slovak Pension Benefit Statement

Author

Listed:
  • Jan Sebo

    (Faculty of Economics, Matej Bel University in Banska Bystrica)

  • Daniela Dankova

    (Faculty of Economics, Matej Bel University in Banska Bystrica)

  • Ivan Kralik

    (Faculty of Economics, Matej Bel University in Banska Bystrica)

Abstract

The introduction of a regulation requiring pension asset managers to provide savers with an estimation of pension benefits opened a wide range of scientific questions on the projection methods and estimation of input parameters. One of them is the estimation of life-cycle income for calculating expected contributions and the estimation of the benefit ratio at the moment of retirement. We present an estimation of life-cycle income functions for various age and educational cohorts influenced by temporary labor market shocks. By employing the resampling simulation method for incorporating macroeconomic shocks, we have shown that using longitudinal data on the income process from a large closed economy could bring valid results for a country with a small open economy as well where the longitudinal data on income processes of individuals are unavailable. Our findings could serve a practical use when pension or other social benefits tied to individual income should be modelled.

Suggested Citation

  • Jan Sebo & Daniela Dankova & Ivan Kralik, 2020. "Projecting A Life-Cycle Income - A Simulation Model For The Slovak Pension Benefit Statement," OLSZTYN ECONOMIC JOURNAL, University of Warmia and Mazury in Olsztyn, Faculty of Economic Sciences, vol. 15(4), pages 271-284, December.
  • Handle: RePEc:ole:journl:v:15:y:2020:i:4:p:271-284
    DOI: https://doi.org/10.31648/oej.6380
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    More about this item

    Keywords

    microsimulation; pension benefits; life-cycle income; labor market shocks;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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