Home and Mortgage Ownership of the Dutch Elderly: Explaining Cohort, Time and Age Effects

The relationship between home ownership of Dutch elderly households and age is strongly negative. Other studies suggest that this age gradient should be attributed to a cohort effect. In this paper we investigate where those cohort effects come from. We also observe that mortgage ownership among elderly home-owners increased considerably during the nineties. Using panel data we estimate models explaining home and mortgage ownership by age, cohort, and time effects, as well as other factors. Cohort and time effects are modelled explicitly using macro economic and housing market related variables. We find that the level of GDP per capita when the household head was young is the main factor explaining generation effects in home ownership among the elderly. After accounting for cohort effects it also appears that home ownership decreases slightly with age. Mortgage ownership among elderly home owners rose considerably during the nineties due to house price increases and due to financial innovation in the mortgage market. Cohort effects are also important. A supplementary analysis suggests that those cohort effects are due to the fact that the accidental bequest motive is becoming less important.home ownership, mortgages, cohort effects

Premium Differentiation in the Unemployment Insurance System and the Demand for Labor

We simulate the effect of the introduction of premium differentiation (experience rating) in the Dutch Unemployment Insurance system on the demand for labor for a variety of sectors in the Dutch economy. For the simulations we use the Bentolila and Bertola (1990) framework as a point of departure. In the simulations, the introduction of experience rating is modeled as expenditure neutral: in the absence of premium differentiation the cost of financing UI is modeled as a wage tax (independent of the number of workers fired by the firm), whereas in the presence of experience rating this cost is attributed to firing cost (affected by the firing action). Thus, the introduction of experience rating results in a shift from wage cost to firing cost. Following the political debate on the issue in the Netherlands, we assume that the introduction of experience rating does neither lead to a change in tax rates paid by workers nor to a change in eligibility rules or replacement rates of benefit claimants. Specific attention is paid to the distinction between ‘young’ and ‘old’ workers . In the model, labor adjustment costs (hiring and firing costs) are linear. The model allows for uncertainty in the business cycle. This discussion paper has resulted in a publication in the Journal of Population Economics , 2002, 17(4), 729-65.Unemployment Insurance; premium differentiation; labor demand

Using data on biomarkers and siblings to study early-life economic determinants of type-2 diabetes

We study the effect of economic conditions early in life on the occurrence of type-2 diabetes in adulthood using contextual economic indicators and within-sibling pair variation. We use data from Lifelines: a longitudinal cohort study and biobank including 51,270 siblings born in the Netherlands from 1950 onward. Sibling fixed-effects account for selective fertility. To identify type-2 diabetes we use biomarkers on the hemoglobin A1c concentration and fasting glucose in the blood. We find that adverse economic conditions around birth increase the probability of type-2 diabetes later in life both in males and in females. Inference based on self-reported diabetes leads to biased results, incorrectly suggesting the absence of an effect. The same applies to inference that does not account for selective fertility.</p

Financial literacy and retirement planning in the Netherlands

The complexity of financial decisions that households now face has increased to unprecedented levels. At the same time, households seem to lack the financial knowledge to cope with these decisions, including how to save and invest adequately for retirement. In this paper, we examine the relationship between financial knowledge and retirement planning in the Netherlands. For this purpose, we have designed a module on financial literacy and planning for the De Nederlandsche Bank (DNB) Household Survey. We find a strong and positive relationship between financial knowledge and retirement planning; those who are more financially knowledgeable are more likely to plan for retirement. Using information on economics education acquired in school, we show that the nexus of causality goes from financial literacy to planning rather than the other way around.Thinking about retirement Knowledge of finance and economics Financial sophistication Economics courses in school