IDEAS home Printed from https://ideas.repec.org/p/diw/diwsop/diw_sp440.html
   My bibliography  Save this paper

The Prospects of the Baby Boomers: Methodological Challenges in Projecting the Lives of an Aging Cohort

Author

Listed:
  • Christian Westermeier
  • Anika Rasner
  • Markus M. Grabka

Abstract

In most industrialized countries, the work and family patterns of the baby boomers characterized by more heterogeneous working careers and less stable family lives setthem apart from preceding cohorts. Thus, it is of crucial importance to understand how these different work and family lives are linked to the boomers' prospective material well-being as they retire. This paper presents a new and unique matching-based approach for the projection of the life courses of German baby boomers, called the LAW-Life Projection Model. Basis for the projection are data from 27 waves of the German Socio-Economic Panel linked with administrative pension records from the German Statutory Pension Insurance that cover lifecycle pension-relevant earnings. Unlike model-based micro simulations that age the data year by year our matching-based projection uses sequences from older birth cohorts to complete the life-courses of statistically similar baby boomers through to retirement. An advantage of this approach is to coherently project the work-life and family trajectories as well as lifecycle earnings. The authors present a benchmark analysis to assess the validity and accuracy of the projection. For this purpose, they cut a significant portion of already lived lives and test different combinations of matching algorithms and donor pool specifications to identify the combination that produces the best fit between previously cut but observed and projected life-course information. Exploiting the advantages of the projected data, the authors compare the returns to education - measured in terms of pension entitlements - across cohorts. The results indicate that within cohorts, differences between individuals with low and high educational attainment increase over time for men and women in East and West Germany.East German boomer women with low educational attainment face the most substantial losses in pension entitlements that put them at a high risk of being poor as they retire.

Suggested Citation

  • Christian Westermeier & Anika Rasner & Markus M. Grabka, 2012. "The Prospects of the Baby Boomers: Methodological Challenges in Projecting the Lives of an Aging Cohort," SOEPpapers on Multidisciplinary Panel Data Research 440, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp440
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.397741.de/diw_sp0440.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gordon B.T. Mermin & Richard W. Johnson & Dan Murphy, 2006. "Why Do Boomers Plan to Work So Long?," Working Papers, Center for Retirement Research at Boston College wp2006-19, Center for Retirement Research, revised Nov 2006.
    2. Anika Rasner & Joachim R. Frick & Markus M. Grabka, 2011. "Extending the Empirical Basis for Wealth Inequality Research Using Statistical Matching of Administrative and Survey Data," SOEPpapers on Multidisciplinary Panel Data Research 359, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Johannes Geyer & Viktor Steiner, 2010. "Public Pensions, Changing Employment Patterns, and the Impact of Pension Reforms across Birth Cohorts: A Microsimulation Analysis for Germany," Discussion Papers of DIW Berlin 984, DIW Berlin, German Institute for Economic Research.
    4. Giovanna Aguilar & Sílvio Rendon, 2010. "Employment And Deadweight Loss Effects Of Observed Nonwage Labor Costs," Economic Inquiry, Western Economic Association International, vol. 48(3), pages 793-809, July.
    5. Jan Goebel & Markus M. Grabka, 2011. "Entwicklung der Altersarmut in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(2), pages 101-118.
    6. Kumpmann, Ingmar & Gühne, Michael & Buscher, Herbert S., 2010. "Armut im Alter – Ursachenanalyse und eine Projektion für das Jahr 2023," IWH Discussion Papers 8/2010, Halle Institute for Economic Research (IWH).
    7. Dale Dannefer, 2003. "Cumulative Advantage/Disadvantage and the Life Course: Cross-Fertilizing Age and Social Science Theory," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 58(6), pages 327-337.
    8. Eichhorst, Werner & Marx, Paul, 2009. "Reforming German Labor Market Institutions: A Dual Path to Flexibility," IZA Discussion Papers 4100, Institute of Labor Economics (IZA).
    9. Hans Fehr & Heinrich Jess, 2007. "Who Benefits from the Reform of Pension Taxation in Germany?," Fiscal Studies, Institute for Fiscal Studies, vol. 28(1), pages 73-101, March.
    10. Michela Coppola, 2011. "Einkommens- und Vermögenssituation der Babyboomer," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(4), pages 31-50.
    11. Pierre-Carl Michaud & Susann Rohwedder, 2008. "Forecasting Labor Force Participation and Economic Resources of the Early Baby Boomers," Working Papers wp175, University of Michigan, Michigan Retirement Research Center.
    12. Julia Simonson & Laura Romeu Gordo & Nadiya Kelle, 2011. "The Double German Transformation: Changing Male Employment Patterns in East and West Germany," SOEPpapers on Multidisciplinary Panel Data Research 391, DIW Berlin, The German Socio-Economic Panel (SOEP).
    13. Kornelia Hagen & Axel Kleinlein, 2011. "Zehn Jahre Riester-Rente: kein Grund zum Feiern," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 78(47), pages 3-14.
    14. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303.
    15. Gordon B. T. Mermin & Richard W. Johnson & Dan P. Murphy, 2007. "Why Do Boomers Plan to Work Longer?," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 62(5), pages 286-294.
    16. Börsch-Supan, Axel & Reil-Held, Anette & Christina Benita Wilke, 2003. "Der Nachhaltigkeitsfaktor und andere Formelmodifikationen zur langfristigen Stabilisierung des Beitragssatzes zur GRV," MEA discussion paper series 03030, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    17. Brugiavini, Agar, 2001. "Early retirement in Europe," European Review, Cambridge University Press, vol. 9(4), pages 501-515, October.
    18. Easterlin, Richard A., 1987. "Birth and Fortune," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226180328, October.
    19. Jan Goebel & Markus M. Grabka, 2011. "Zur Entwicklung der Altersarmut in Deutschland," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 78(25), pages 3-16.
    20. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, January.
    21. Grub, Martin, 2004. "Reform der Rentenbesteuerung," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW - Leibniz Information Centre for Economics, vol. 84(5), pages 299-308.
    22. Joachim R. Frick & Markus M. Grabka & Anika Rasner & Marian Schmidt & Morten Schuth & Christian Westermeier, 2012. "Familienbiographische Verläufe im Kohortenvergleich," SOEPpapers on Multidisciplinary Panel Data Research 439, DIW Berlin, The German Socio-Economic Panel (SOEP).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Glaubitz, Rick & Harnack-Eber, Astrid & Wetter, Miriam, 2022. "The gender gap in lifetime earnings: The role of parenthood," Discussion Papers 2022/3, Free University Berlin, School of Business & Economics.
    2. Hänisch, Carsten & Klos, Jonas, 2016. "Long-run effects of career interruptions: A micro-simulation study," Discussion Paper Series 2016-03, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    3. Rick Glaubitz & Astrid Harnack-Eber & Miriam Wetter, 2022. "The Gender Gap in Lifetime Earnings: The Role of Parenthood," Discussion Papers of DIW Berlin 2001, DIW Berlin, German Institute for Economic Research.
    4. Kelle, Nadiya & Simonson, Julia & Gordo, Laura Romeu, 2014. "Höhere Bildung = höhere Rentenanwartschaften? Eine Analyse von Frauen der Babyboomer- Kohorte in Ost- und Westdeutschland," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 21(2), pages 25-32.
    5. Nadiya Kelle & Julia Simonson & Laura Romeu Gordo, 2014. "Höhere Bildung = höhere Rentenanwartschaften? Eine Analyse von Frauen der Babyboomer- Kohorte in Ost- und Westdeutschland," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 21(02), pages 25-32, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michela Coppola, 2011. "Einkommens- und Vermögenssituation der Babyboomer," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(4), pages 31-50.
    2. Alexander Herzog-Stein & Fabian Lindner & Rudolf Zwiener, 2013. "Is the supply side all that counts?," IMK Report 87e-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Nicholas Barr & Peter Diamond, 2009. "Reforming pensions: Principles, analytical errors and policy directions," International Social Security Review, John Wiley & Sons, vol. 62(2), pages 5-29, April.
    4. Alexander M. Danzer, 2013. "Benefit Generosity and the Income Effect on Labour Supply: Quasi‐Experimental Evidence," Economic Journal, Royal Economic Society, vol. 123, pages 1059-1084, September.
    5. Brooke Helppie McFall & Amanda Sonnega & Robert J. Willis & Peter Hudomiet, 2015. "Occupations and Work Characteristics: Effects on Retirement Expectations and Timing," Working Papers wp331, University of Michigan, Michigan Retirement Research Center.
    6. Heike Joebges & Volker Meinhard & Katja Rietzler & Rudolf Zwiener, 2012. "On the Path to Old-Age Poverty - Assessing the Impact of the Funded Riester Pension," IMK Report 73e-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    7. Owen Haaga & Richard W. Johnson, 2012. "Social Security Claiming: Trends and Business Cycle Effects," Discussion papers 12-01, Urban Institute, Program on Retirement Policy.
    8. Börsch-Supan, Axel & Quinn, Christopher, 2015. "Taxing pensions and retirement benefits in Germany," MEA discussion paper series 201510, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    9. Alexander Herzog-Stein & Fabian Lindner & Rudolf Zwiener, 2013. "Nur das Angebot zählt?," IMK Report 87-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    10. Nicholas Barr & Peter Diamond, 2008. "Reforming Pensions," Working Papers, Center for Retirement Research at Boston College wp2008-26, Center for Retirement Research.
    11. Robert Clark & Melinda Morrill, 2013. "Increasing Work Life: The Role Of The Employer," Discussion Papers 13-016, Stanford Institute for Economic Policy Research.
    12. Börsch-Supan, A. & Härtl, K. & Leite, D.N., 2016. "Social Security and Public Insurance," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 781-863, Elsevier.
    13. Danzer, Alexander M., 2010. "Retirement Responses to a Generous Pension Reform: Evidence from a Natural Experiment in Eastern Europe," IZA Discussion Papers 4726, Institute of Labor Economics (IZA).
    14. Falko Trischler & Ernst Kistler, 2011. "Erwerbsverläufe und Alterseinkünfte im Paar- und Haushaltskontext," SOEPpapers on Multidisciplinary Panel Data Research 429, DIW Berlin, The German Socio-Economic Panel (SOEP).
    15. Chris Phillipson & Rebecca Leach & Annemarie Money & Simon Biggs, 2008. "Social and Cultural Constructions of Ageing: The Case of the Baby Boomers," Sociological Research Online, , vol. 13(3), pages 1-14, May.
    16. András Simonovits, 2021. "Introducing flexible retirement : a dynamic model," CERS-IE WORKING PAPERS 2109, Institute of Economics, Centre for Economic and Regional Studies.
    17. Andree Ehlert, 2021. "The effects of health shocks on family status: do financial incentives encourage marriage?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(9), pages 1393-1409, December.
    18. Christoph Butterwegge, 2014. "Altersarmut und Sozialpolitik: warum das Rentenpaket der Großen Koalition wenig zur Armutsbekämpfung beiträgt," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 83(2), pages 69-81.
    19. Axel Börsch-Supan & Christopher Quinn, 2015. "Taxing Pensions and Retirement Benefits in Germany," CESifo Working Paper Series 5636, CESifo.
    20. Kistler, Ernst & Trischler, Falko (ed.), 2014. "Reformen auf dem Arbeitsmarkt und in der Alterssicherung - Folgen für die Einkunftslage im Alter," Study / edition der Hans-Böckler-Stiftung, Hans-Böckler-Stiftung, Düsseldorf, volume 127, number 196, December.

    More about this item

    Keywords

    Forecasting Models; simulation methods; SOEP; baby boomers; education; public pensions;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. SOEP based publications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwsop:diw_sp440. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/sodiwde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.