Papers by Sylvester Schieber
The strong link between health insurance and employment in the United States may cause workers to... more The strong link between health insurance and employment in the United States may cause workers to delay retirement until they become eligible for Medicare at age 65. However, some employers extend health insurance benefits to their retirees, and individuals who are eligible for such retiree health benefits need not wait until age 65 to retire with group health coverage. We investigate the impact of retiree health insurance on early retirement using employee-level data from 64 diverse firms that are clients of Towers Watson, a leading benefits consulting firm. We find that retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 3.7 percentage point (21.2 percent) increase in the probability of turnover at age 62 and a 5.1 percentage point (32.2 percent) increase in the probability of turnover at age 63; it has a more modest effects for individuals under the age of 62. A more generous employer contribution of 50 percent or more raises turnover by 1-3 percentage points at ages 56-61, by 5.9 percentage points (33.7 percent) at age 62, and by 6.9 percentage points (43.7 percent) at age 63. Overall, an employer contribution of 50 percent or more reduces the total number of person-years worked between ages 56 and 64 by 9.6 percent relative to no coverage.
The world is getting older and no one knows exactly what life will be like in tomorrow's olde... more The world is getting older and no one knows exactly what life will be like in tomorrow's older societies. But we do know that age dependency ratios - the ratio of retirees to workers - will be much higher than we see today. The implications of this trend are plain. The combined effects of fewer workers, more retirees and longer retirement periods threaten not only the sustainability of pension systems but also the broader economic prospects of many developed countries. This book describes trends in birth rates, longevity and labor force participation and productivity, the cross-border flow of capital, the globalization of labor markets, the financial viability of social insurance programs, and the ways economic output is shared between working-age and retiree populations. Our most effective solution will likely be a multifaceted one: more workers, longer careers, higher productivity, and more global exchange and cooperation.
Social Science Research Network, 2015
Delaying Social Security claiming is equivalent to buying an annuity, as individuals who delay fo... more Delaying Social Security claiming is equivalent to buying an annuity, as individuals who delay forgo current benefits in exchange for higher monthly benefits in the future. Despite growing evidence that this annuity is offered on extremely generous terms, the majority of people claim well before age 70. In addition, many people offered a choice between a lump sum and annuity payout from their defined benefit pension choose the lump sum even though it is typically actuarially disadvantageous. We present new evidence, based on an original survey, on why people claim Social Security early, how satisfied they are ex post with their claiming decision, and how well they understood Social Security’s rules at the time of claiming. Our survey also provides insight into defined benefit payout choices by asking people about these choices as well as their motivations for choosing a lump sum over an annuity. We find that the most common reasons for claiming Social Security early are a need for cash, an assumption that claiming should occur upon stopping work, and a desire to invest the money and come out ahead. For defined benefit pensions, we find that less than half of individuals who were offered a choice chose the lump sum, and among individuals who chose the lump sum, a large number rolled the money into an IRA.
RePEc: Research Papers in Economics, Mar 1, 1994
Choice Reviews Online, Oct 1, 2012
Over the last several years, U.S. employers have had to scramble for workers of all sorts in unpr... more Over the last several years, U.S. employers have had to scramble for workers of all sorts in unprecedented ways. After experiencing personnel shortfalls during the late 1990s, the Navy has pursued new recruiting approaches: in 2001, for instance, it sent almost every Harvard undergraduate an e-mail invitation to apply to become a commissioned ofWcer in the U.S. Navy (Gizzle 2001). The furniture store, Ikea, also has sought new ways to attract job applicants, by posting want ads on the walls of restrooms (Seattle Post-Intelligencer 2000). A recent article in HR Magazine (Tyler 2001) told of recruiting of a mechanical engineer from Detroit to San Francisco. With two job offers in hand, he took the one that included an "employerassisted housing" program. Manufacturing jobs continue to decline in the U.S. economy, but there are still many employers that need workers. Some people believe that the recent economic slowdown, starting in 2000, may dampen employers' efforts to Wnd creative new ways of recruiting staff. The reality is, that despite news of layoffs, unemployment rates in the United States remain low by historical standards. Even with the collapse of many dot.com Wrms, there are still technology jobs going unWlled. For example People3 Inc., a Gartner company that analyzes trends in information technology, predicts that demand for IT workers will outpace supply by at least 20 percent over the next four years. Dot.com workers thrown out of jobs at hightechnology Wrms are often able to Wnd technology jobs in more traditional Wrms, as the latter adopt their own e-business innovations (Goodridge 2001). The U.S. economy has clearly been the most vibrant of all the major countries over the last decade. Now the question is whether that vibrancy can be maintained in the face of changing labor markets. In this chapter we suggest that tight labor markets of the last decade have generated a variety of unique approaches to Wnding, attracting, and retaining workers.
Cambridge University Press eBooks, Jan 17, 2005
Throughout much of this discussion, we have emphasized the need to consider the implications of p... more Throughout much of this discussion, we have emphasized the need to consider the implications of population aging within the broader context of the macroeconomic burden that aging dependency will pose across all segments of societies. Discussions of population aging often devolve into debates over how to reduce pension costs or the more general costs of government operations. An alternative approach is to explore policies and institutional changes that would promote economic growth. Economic growth both supports rising standards of living and fills the public coffers that finance public pension programs. In this section, we look at several scenarios in which countries can pursue enhanced economic growth. Namely, we estimate how the growth in standards of living would change if policies were adopted to: 1) increase workforce activity rates and 2) enhance labor efficiency. In addition, we sort through how increasing economic growth can raise standards of living for both the elderly and non-elderly segments of the population. No one disputes the prediction that population aging will increase the future costs of public pension and health care programs. In recent decades, rising age-related spending has been exacerbated by the trends toward earlier retirement and longer life expectancy. The combination of these two trends has reduced tax contributions and increased retirement expenditures because more pensioners are collecting their retirement benefits for longer periods of time.
Cambridge University Press eBooks, Jan 17, 2005
Cambridge University Press eBooks, Jan 17, 2005
Public policy & aging report, Jun 1, 2004
Cambridge University Press eBooks, Jan 17, 2005
Cambridge University Press eBooks, Jan 17, 2005
The Economic Implications of Aging Societies, 2005
During the past decade, the U.S. labor market has undergone considerable change, especially as in... more During the past decade, the U.S. labor market has undergone considerable change, especially as increased international competition and continued technological innovation have created pressures for firms to reduce labor costs substantially. In reporting on these events, it is rare for a week to go by without headlines about plant closings, layoffs, or restructurings. The prevailing wisdom in media accounts is that many workers who had been sheltered from layoffs in earlier decades are no longer protected. Particular attention has been paid to layoffs of white collar workers, workers employed in large corporations, and workers in the middle of their careers. 1 Media accounts focus on the plight of middle-aged and older workers, who now account for a larger share of job losers than they did in the past. 2 This perception also shows up in surveys of public opinion. Church (1993) reports that in a Time-CNN poll in 1993, two-thirds thought that job security was worse than it was two years ago (when the unemployment rate was the same) and 53 percent thought that this problem will last for many years. In a poll conducted as part of the weeklong New York Times (1996) series, 46 percent of the respondents said they were worried about becoming unemployed and 72 percent 1 The following quote from the weeklong series "The Downsizing of America" in the New York Times (1996) captures much of today's prevailing wisdom (italics added for emphasis): "More than 43 million jobs have been erased in the United States since 1979 … Many of the losses come from the normal churning as stores fail and factories move. And far more jobs have been created than lost over that period. But increasingly the jobs that are disappearing are those of higher-paid, white-collar workers, many at large corporations, women as well as men, many at the peak of their careers. Like a clicking odometer on a speeding car, the number twirls higher nearly each day. … What distinguishes this age are three phenomena: white-collar workers are big victims; large corporations now account for many of the layoffs, and a large percentage of the jobs are lost to "outsourcing"-contracting out work to another company, usually within the United States." 2 The widely-cited New York Times (1996) report has a graphic showing the share of laid off workers under age 30 had fallen from 40 to 25 percent between 1981-83 and 1991-93. The share of laid off workers age 30 to 50 rose from 44 to 56 percent.
This paper examines the impact of the aging demographic structure of the U.S. on its funded priva... more This paper examines the impact of the aging demographic structure of the U.S. on its funded private pension system. A 75-year outlook is produced for the pension system corresponding to the 75-year forecast of the Social Security system. The primary result is that the pension system will cease being a source of national saving in the third decade of the next century. The paper speculates about the impact this may have on asset prices.
SSRN Electronic Journal, 2009
In summer 2009, health care reform seems almost within reach. President Barack Obama is urging th... more In summer 2009, health care reform seems almost within reach. President Barack Obama is urging the Congress to pass bills, and both the House and Senate are trying to deliver. Everyone agrees on the necessity of reform, but that’s where the agreement ends. Most of the ongoing discussions about who should pay for health care legislation have proposed employer coverage mandates, limitations on health benefit tax preferences, taxation of health insurers and 'play-or-pay' provisions, all of which would distribute the costs of expanded coverage among employers and, through them, to their workers in the form of slower wage growth. An important - but often overlooked - point in these discussions is that health costs paid by employers are part of the compensation paid to workers. Compensation includes wages, employer contributions to Social Security and Medicare, the cost of any health insurance coverage for workers and their dependents, and contributions to any pension plans, 401(k) plans and other capital accumulation programs. While many of the proposals for health reform are looking to employers to fund much of the cost, there has been little focus on the links among wages, compensation and the cost of employer-sponsored health and retirement benefits. No one has talked much about how higher health benefit costs to employers would affect the paychecks workers bring home. The analysis in this report projects five scenarios that illustrate the importance of controlling health costs. In our baseline scenario, we manage to cut health benefit cost inflation rates roughly in half and do not expand health insurance coverage. In that scenario, wage growth rates are projected to be roughly equivalent to those of the 1990s for the next couple of decades. Under an assumption that we control health cost inflation but expand coverage by means of an employer play-or-pay mandate, the effect on wage growth patterns would be negative at the bottom of the earnings distribution and mildly negative in the middle of the earnings distribution for a while. But after 2015, wage growth rates would return to the healthier levels of the 1990s. Bringing health costs under control allows more resources for expanded coverage. If we expanded health insurance coverage but our current health cost inflation rate continued unabated, the higher overall costs would result in falling wages at the bottom of the earnings spectrum and very slow wage growth on up the earnings distribution. These dismal wage outcomes would persist over at least the next couple of decades, possibly longer. The next scenario considers the real possibility that health inflation increases as a result of expanded insurance coverage offered under reform. Looking back at the implementation of Medicare, this is exactly what happened. This scenario combines expanded health care coverage with accelerated health inflation rates. In this case, the higher costs would drive disposable wages downward across most of the earnings spectrum, although the declines would be steepest for lower-earning workers. These depressed conditions would persist over the entire projection period. Fixing what is broken in our health care system is about more than expanding health insurance coverage or deciding whether taxing employer-sponsored health benefits is good or bad policy. No matter how health care reform is financed - whether by employers, who pass the costs on to workers, or taxpayers - the bill will be unaffordable unless costs are brought under control. Our current health care system is embedded with incentives that encourage providers to dispense an ever-expanding menu of treatments and medications, even where there is little evidence of their efficacy. Our health care system already costs 40 percent to 100 percent more than its counterparts in other developed countries and is growing twice as fast.
Themes in the Economics of Aging, 2001
Journal of Public Economics, 2013
The strong link between health insurance and employment in the United States may cause workers to... more The strong link between health insurance and employment in the United States may cause workers to delay retirement until they become eligible for Medicare at age 65. However, some employers extend health insurance benefits to their retirees, and individuals who are eligible for such retiree health benefits need not wait until age 65 to retire with group health coverage. We investigate the impact of retiree health insurance on early retirement using employee-level data from 64 diverse firms that are clients of Towers Watson, a leading benefits consulting firm. We find that retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 3.7 percentage point (21.2 percent) increase in the probability of turnover at age 62 and a 5.1 percentage point (32.2 percent) increase in the probability of turnover at age 63; it has a more modest effects for individuals under the age of 62. A more generous employer contribution of 50 percent or more raises turnover by 1-3 percentage points at ages 56-61, by 5.9 percentage points (33.7 percent) at age 62, and by 6.9 percentage points (43.7 percent) at age 63. Overall, an employer contribution of 50 percent or more reduces the total number of person-years worked between ages 56 and 64 by 9.6 percent relative to no coverage.
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Papers by Sylvester Schieber