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Life Cycle Decisions

The Life-Cycle Decisions unit studies the key economic decisions that individuals have to make , with a focus on issues of old age, especially care planning and financing, but from a perspective of their whole lifespan. This research is part of the EU Commission-funded project “BB-Future: The Care Wave and the Future of the Baby Boomers and Their Children”.

Key research questions are:

  1. On the individual level: How do families behave in this complex situation? What are their labor force and saving decisions? Where will they locate accordingly? How much will the increased pressure to provide care affect the gender pay, employment and pension gaps?
  2. On the institutional level: How can public and private LTC insurance be designed to achieve an optimal balance between formal and informal care?
  3. On the macroeconomic level: Aging will make labor scarce. How will it be divided between labor supply and family care? How will saving and dissaving evolve, and how does this depend on social insurance design?

The research is conducted taking into account uncertainty and the dynamic aspect of planning for future. The issues are studied trough both theoretical and empirical lenses, and considering both micro- and macroeconomic aspects. While studying individuals’ life-cycle decisions, we consider the intergenerational family ties. These ties are often economically important. For example, long-term care is often provided informally by adult children to retired parents. These arrangements and decisions have wider economic implications for individuals’ labor force participation, savings and housing decisions. The unit seeks to study how are all these decisions connected and determined jointly. The project has five highly interrelated steps: modelling, estimating using SHARE data, policy formulation, micro and macro simulation, and policy recommendations.

  • Macroeconomics
  • Overlapping-generations models
  • Long-term care
  • Intra-family bargaining