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Micro simulations on the effects of ageing-related policy measures

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  • van Sonsbeek, Jan-Maarten

Abstract

In the Netherlands, like in most OECD-countries, the ageing of the population endangers the sustainability of public finances. In this paper a dynamic micro simulation model is used for calculating the financial and economic implications of the ageing problem and the policy measures considered. The model uses micro datasets of all Dutch pensions and pension entitlements. The retirement decision is modelled by using an option value approach. First, the paper discusses the baseline scenario of unchanged policies. The micro simulation results differ from previous macro CGE results. The state pension costs rise less sharply than the number of pensioners. Also the micro simulation model is used to analyse the redistributive character of the Dutch pension system, both through differences in pension entitlements and through differences in life expectancy, for different subgroups. The retirement decision is analysed with an option value based behavioural model. Secondly, the paper discusses the effects of five policy measures aimed at reducing the state pension costs and the sustainability gap: abolishment of the partner allowance (a measure that is already decided about), raising the retirement age from 65 to 67Â years of age, introduction of a flat rate state pension at the same level as the current pension for partners of a couple, raising the taxation of wealthier pensioners by abolishing their tax exemption and introduction of a flexible retirement window with a high accrual to reward later retirement. For each measure, the budgetary effects, labour participation effects and redistributive effects are quantified and assessed.

Suggested Citation

  • van Sonsbeek, Jan-Maarten, 2010. "Micro simulations on the effects of ageing-related policy measures," Economic Modelling, Elsevier, vol. 27(5), pages 968-979, September.
  • Handle: RePEc:eee:ecmode:v:27:y:2010:i:5:p:968-979
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    References listed on IDEAS

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    Cited by:

    1. Nicholas-James Clavet & Jean-Yves Duclos & Bernard Fortin & Steeve Marchand, 2014. "Reforming Old Age Security: Effects and Alternatives," Cahiers de recherche 1410, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    2. Marcin Bielecki & Karolina Goraus & Jan Hagemejer & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," Working Papers 2014-12, Faculty of Economic Sciences, University of Warsaw.
    3. Courtioux, Pierre & Gregoir, Stéphane & Houeto, Dede, 2014. "Modelling the distribution of returns on higher education: A microsimulation approach," Economic Modelling, Elsevier, vol. 38(C), pages 328-340.
    4. Mielczarek, Bożena, 2013. "Simulation model to forecast the consequences of changes introduced into the 2nd pillar of the Polish pension system," Economic Modelling, Elsevier, vol. 30(C), pages 706-714.
    5. Meritxell Solé & Guadalupe Souto & Concepció Patxot, 2018. "Sustainability and adequacy of the Spanish pension system after the 2013 reform: a microsimulation analysis," UB Economics Working Papers 2018/372, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    6. Jan Hagemejer & Marcin Bielecki & Karolina Goraus & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," EcoMod2014 6868, EcoMod.
    7. Batabyal, Amitrajeet & Nijkamp, Peter, 2016. "On Pessimism and Optimism by Forward Looking Agents and the Need for Social Security," MPRA Paper 75965, University Library of Munich, Germany, revised 03 Jan 2017.
    8. Bielecki, Marcin & Goraus, Karolina & Hagemejer, Jan & Tyrowicz, Joanna, 2016. "Decreasing fertility vs increasing longevity: Raising the retirement age in the context of ageing processes," Economic Modelling, Elsevier, vol. 52(PA), pages 125-143.

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