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AGIR -project workshop 14-15 February 2003 CPB, Hague

AGIR -project workshop 14-15 February 2003 CPB, Hague Option Value for Retirement under Changing Health and Active Leisure: Multinational Retirement and Time Use Study. OUTLINE OF PRESENTATION. Introduction Time use and labour market research Welfare regimes Data Methods

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AGIR -project workshop 14-15 February 2003 CPB, Hague

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  1. AGIR -project workshop 14-15 February 2003 CPB, Hague Option Value for Retirement under Changing Health and Active Leisure: Multinational Retirement and Time Use Study

  2. OUTLINE OF PRESENTATION • Introduction • Time use and labour market research • Welfare regimes • Data • Methods • Health status • Net replacement rate • Option value • Results • Time use • Option values • Conclusion

  3. TIME USE DATA, AGEING POPULATION, AND LABOR MARKET RESEARCH • Previous work at ETLA: • Ruuskanen, Olli-Pekka: Replacement Rates and Reservation Wages Considering the Value of Household Work and Lost Leisure (Etla Discussion Paper 588, 1997) • Huovinen, Pasi and Hannu Piekkola: The Time is Right? Early Retirements and Use of Time by Older Finns (ETLA B 189 2002) • Applications of time-use data: • Economic and social accounting (macro-level) • Descriptive analyses, household production, labour market behaviour (micro-level)

  4. ALLOCATION OF TIME: total work • Assume people consider total work time (paid work+domestic work) when allocating time between work and leisure to maximize utility • Value domestic work with net wage for this kind of work • Account for increase in domestic work in non-employment Production function for household goods Goods constraint Time constraint Production functions

  5. RETIREMENT AGE Table 1. Average ages of withdrawal from labour force 1994-99 Men Women Austria Belgium* 59.0 58.9 Denmark 62.4 61.5 Finland 59.8 60.0 France 59.3 58.4 Germany ** 60.5 59.8 Italy 59.3 58.4 Netherlands ** 61.6 60.1 Norway 64.2 64.7 Portugal 65.3 66.5 Spain 61.1 61.1 Sweden 63.3 61.8 United Kingdom 62.0 61.2 United States 65.1 64.2 * 1971-1976 ** 1993-1998 Scherer, P. (2002) Age of Withdrawal from the Labour Force in OECD Countries. Labour Market nad Social Policy Occasional Papers. No. 49. OECD

  6. Table 2. countries and survey years of original data DATA • MTUS data • 24 countries, 50 time-use surveys • Harmonized data • Original Data • Austria, (Belgium), Denmark, Finland, Germany, The Netherlands, UK, (Portugal) • Finland 1999/2000 follows new Eurostat standards • one weekend & one weekday • demographic and income variables linked

  7. METHODS • Document time use in household work • Wage rates, social security payments, tax treatment • Estimating health status • Replacement rates • Option values

  8. HEALTH STATUS Table 5. Paid work and domestic work, 45-64 year olds (hours per week) • Domestic work increases in non-employment (men 10 hours, women 12.9 hours for healthy) • The unhealthy work less, the relative increase in domestic work after withdrawal from work smaller • Prediction more accurate for men

  9. TOTAL WORK = work + domestic work Table 6. Total work by gender, employment status, and health (hours per week) • Low burden: Denmark, High burden: Portugal, UK • Women adjust total work 10 hours less than men after withdrawal from work • The unhealthy: • Unhealthy men work less, health has no effect among the non-employed • Unhealthy women work less, employed and non-employed

  10. FEMALE SHARE OF TOTAL WORK Table 7. Female share of paid and total work by employment status and health among the employed • Women do half of total work in all countries • Women do less paid work, especially in Germany, Netherlands, Austria

  11. DOMESTIC WORK Table 8. Domestic work by gender, employment status and health (hours per week) • Women supply 11 hours more domestic work than men! • Domestic work increases in non-employment • Healthy: 10.1 hours for men and 10.3 for women • Unhealthy: 8.1 hours for men and 2.4 hours for women

  12. DOMESTIC WORK & WELFARE REGIMES Table 14 Domestic work by welfare regime, gender, and employment status, original data 45-64 –year-olds (hours per week) • Domestic work increases in non-employment • Nordic regime: smallest increase, Southern Continental/Liberal: biggest increase • Nordic: share most equally, Southern Continental: share most unequally

  13. FEMALE SHARE OF DOMESTIC WORK Table 9. Female share of unpaid work time by employment status and health • Women do 2/3 of domestic work • Unhealthy and the non-employed share domestic work more equally

  14. FEMALE SHARE OF DOMESTIC WORK & WELFARE REGIMES Table 15. Female share of domestic work by welfare regime, original data 45-64 –year-olds. • Women do 2/3 of domestic work • Southern Continental: higher female share • The Non-employed share domestic work more equally

  15. ESTIMATING HEALTH STATUS Finnish data: self-assessment of health unhealth=”notable health problems”, 5%-15% of 45-59-years old. ECHP uses ”very poor -very good” five categories Other countries: Demographic factors and time use used to predict health status

  16. PROBIT MODEL FOR HEALTH STATUS AGE 44-64

  17. MAIN TIME USE RESULTS • Women (10 hours) and the unhealthy ( 2-5) adjust total work supply by less after withdrawal from work • Less work than men and the healthy before, • more work after withdrawal from work • Domestic work increases 10 hours in non-employment for both sexes • 5.2 €/h=2704 €/a • Female shares • 1/2 of total work • 2/3 of domestic work • Non-employed and the unhealthy share al work more equally

  18. MAIN TIME USE RESULTS & WELFARE REGIMES • Nordic regime: smallest increase, Southern Continental/Liberal: biggest increase in domestic work after withdrawal from work • Southern Continental: higher female share in domestic work, valued less

  19. NET REPLACEMENT RATE Net replacement rate (NRR) = net pension + value of domestic work / net earnings + value of domestic work

  20. OPTION VALUE Option value = lifetime utility, retire at particular (optimal) age – lifetime utility, retire today

  21. DOMESTIC WORK AND OPTION VALUE • Relative earnings lower: foregone domestic work • Replacement rate and pension wealth higher • Overall effect: the option value of postponed retirement lower

  22. OPTION VALUES at age 55 (1000 Euro)

  23. OPTION VALUES at age 55 (1000 Euro)

  24. CONCLUSIONS • Pensionable age crucial, after that option value decreases except with low replacement rate (UK, Denmark) • Domestic Work: • Decreases option values • Slope steeper with domestic work after retirement age • Gender differences: larger effect for men • The unhealthy: smaller increase in domestic work after retirement, shorter life expectancy, less effect on option value?

  25. COUNTRY TABLES

  26. COUNTRY TABLES

  27. TOTAL WORK & WELFARE REGIMES Table 11. Total work by gender, employment status, and welfare regime, 45-64 –year-olds (hours per week)

  28. EMPLOYMENT & WELFARE REGIMES Table 12. Employment rates by country and welfare regime, 45-64 –year-olds (reported time-use in paid work).

  29. For more information or a copy of the paper, please contact • hannu.piekkola@etla.fi • or • liisa.harmoinen@etla.fi

  30. WELFARE REGIMES Table 3. Welfare regimes according to Esping-Andersen and Kosonen Esping-Andersen, Gøsta (1990). The Three Worlds of Welfare Capitalism. Polity Press, Cambridge Kosonen, Pekka (1994). European Integration: A Welfare State Perspective. University of Helsinki Sociology of Law Series No. 8. Yliopistopaino, Helsinki

  31. WELFARE REGIMES: time use approach Table 4. Three alternative service economies according to Gershuny: time-use perspective Gershuny, Jonathan (2000). Changing Times. Oxford University Press, Oxford.

  32. OECD

  33. H i s t o r y o f t i m e u s e r e s e a r c h • First time use studies done in USSR in the 1920’s • First Multinational time use study by Szalai (not before) mid-1960’s • Szalai study motivates many other countries carry out national diary surveys • Multinational Time Use Study, so-called Essex data 1980 • Raising level of interest among Economists (especially in U.S.) 1980-1990

  34. I n t r o d u c t i o n • International co-operation • Szalai’s multinational survey • MTUS • HETUS • AGIR • Time use research • History and background • Methodology • Applications • Economics and time use • Literature

  35. M e t h o d o l o g y • Main characteristic: Difficult and costly • Use of diaries seen as the only way to obtain reliable data on time use • Sample aimed to provide diaries of all types of days and seasons of the year • Weights have to be built to meet this demand • Respondents fill a 24 hour diary. Diary entries coded (!) to a standard list of activities • Normally two diary days by each respondent (but this varies. ie. Netherlands: 7 days) • Normally wide range of background information collected in interviews • Main activity - secondary activity • With whom -questions • Yesterday and tomorrow diaries

  36. - a n d + • Capability of providing information on non-pecuniary activities • More reliable data on market activities than traditional surveys (ie. labour supply) • Costly and difficult • Panel sets of time use data do not exist • A lot of zero reported hours on activities • Harmonisation process results in a lot of lost detail and scope of information • Effect on social sciences has not been very significant (why?)

  37. A p p l i c a t i o n s • Macro level: augmented economic and social accounting systems • Inputs for production outside the market • Inputs of leisure time • Micro level: modelling and describing household behaviour • Descriptive studies: division of responsibility, • use of time in childcare and elderly care (and leisure) • Models: labour supply (!), household production • ETLA: Net replacement rates and reservation wages with lost time, • time use of elderly, leisure time allocation’s effect in early retirement decision

  38. Economics and time use research • Household production models • Mincer (1962) Becker (1965) Gronau (1970) • Time and money intensity of commodities • Intertemporal Time Use • Ghez & Becker (1975) Blinder & Weiss (1976) Ryder, Stafford & Stephan (1976) • Time use strongly related to age. Time is allocated over time between • training, market work, non-market work and leisure to reach optimal • level of consumption

  39. I n t e r n a t i o n a l c o - o p e r a t i o n • First Multinational time use study by Szalai, mid-1960’s, founded by UNESCO • 12 countries (Soviet Union, United States, Federal Republic of Germany, German Democratic Republic, • Bulgaria, Czechoslovakia, Hungary, Poland, Yugoslavia, Belgium, France, and Peru) • http://www.radcliffe.edu/murray/data/ds/ds0652.htm • International Association for Time Use Research, St. Mary’s University Halifax • promotes development of time use research methods, theory etc. • encourages international and diachronic comparability of time-use • studies • arranges yearly meetings for researchers working with time use • Multinational Time Use Study, Institute for Social and Economic Research, Essex

  40. M T U S • Started 1980s by Professor Jonathan Gershuny • Harmonised time diary data from 50 studies conducted in 24 countries • Multiple surveys from 12 countries • Aggregated file of 40 activity categories • Limited demographic details • Age limit still 20 and 60 (to be removed within weeks) • 150 792 observations • Main problems in international comparability occur among the activity classification

  41. ..M T U S Main problems in international comparability occur among the activity classification Different background data collection Different years of data collection (And different periods: more than a year -> two weeks) 2 to 7 diary days Different response rates Some have age ranges

  42. Countries and Survey Years Covered Australia 1997, 1992, 1987, 1974 Austria 1992 Belgium 1965 Bulgaria 1988 Canada 1992, 1986, 1981, 1971 Czechoslovakia 1965 Denmark 1987, 1964 East Germany 1965 France 1974, 1965 Finland 1987, 1979 Germany 1992 Hungary 1986/87, 1977, 1965 Israel 1990 Italy 1989, 1980 The Netherlands 1995, 1990, 1985, 1980, 1975 Norway 1991, 1981, 1971 Peru 1965 Poland 1965 Sweden 1991 UK 1999, 1995, 1983/84 & 1987 (combined as 1985), 1975, 1961 USA 1992-94, 1985, 1975, 1965 West Germany 1965 Yugoslavia 1965

  43. U p d a t e s • File including people who fall outside the age range of the World 5.5 main file (both younger and older)Expected January 2002 • File documenting the calculation of the education variable Expected Winter 2001 • The following new variables will be included in the World 5.5 file: • Number of children (NCHILD) • Age of youngest child (AGEKID) • Household size (HHSIZE) • Employment status of spouse (EMPSP) • Number of parents (2-parent or 1-parent households) (NPAR)

  44. F u t u r e of I n t e r n a t i o n a l c o - o p e r a t i o n: HETUS Organised by EUROSTAT to allow cross-national comparison of time use data in Europe Aim to harmonise data collection and produce a harmonised data file Samples of 3000+ diaries All household members aged 10+ (whole household keeps diaries on the same days; weekday + weekend day) Primary and secondary activities, with whom questions, and where

  45. Trends in Time use in the second half of the twentieth century • 4 categories: Paid and unpaid work, leisure & basic needs (sleep, drink etc.) • Behavioral vs. Stuctural change • employment, sex and family status main variables • associated with variation in time use. country and period have smaller role • effects normally much smaller for men than women • 3 x Converging time use • Country, Gender, Social group

  46. The virtuous triangle I: work and leisure in the second half of the twentieth century. (Gershuny 2000)

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