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KMID : 0613620180380020167
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Health Social Welfare Review
2018 Volume.38 No. 2 p.167 ~ p.190
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The Effects of Increase in Social Insurance Contributions and Coverage on the Retirement Timing and Savings of Mid-Aged and Elderly Households
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Won Jong-Wook
Lee Yeon-Hee
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Abstract
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This paper tests the effects of increase in the National Pension contribution rate and expansion of coverage of the National Health Insurance to the timing of retirement and the level of savings in mid-aged and elderly households. Dynamic programming is used to estimate parameters of value function of which budget constraint is expanded to include the burden of paying contributions to social insurance. Sixteen parameters of value function were used, including risk aversion, discount rate, bequest intensity, spouses’ elasticities of labor supply and preference for leisure, to test policy experiment on pension and health insurance. By estimating parameters, we could project rational and reasonable behavioral change of mid-aged and elderly households in retirement timing and saving. KLoSA (Korean Longitudinal Study of Ageing) is used to obtain panel sample that meets various selection requirements including age of 45-59 in 2006. Results show that expansion of the coverage of the National Health Insurance contributes to increasing the level of saving
and retirement timing of men, although not to ameaningful extent. On the contrary, increase in the National Pension contribution rate contributes to decreasing the saving level of the panel sample.
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KEYWORD
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Dynamic Programming, Retirement Timing, National Pension Plan, National Health Plan
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