RDP 2006-06: Ageing, Retirement and Savings: A General Equilibrium Analysis Appendix B: Data Sources for Calibration

Life expectancy (T): average calculated from ABS Cat No 3302.0, Table 7.3.

Cohort growth rate (n): we calculate a value of n consistent with the 2004 population in Model 4 from the Productivity Commission's (2005) report into population ageing. Here, the median age of the population aged 20 or over is 44 years and life expectancy (under the medium scenario) is 81 years. Substituting this life expectancy into our OLG model (after subtracting 20), one of a range of values of n that yields this median age is 1.2 per cent.

Human capital profile (e_s): we use the 1999 coefficient estimates presented in Tables 6.2 and 6.3 for Equation (12) from Reilly et al (2005). We construct hourly wages by age for a representative agent by weighting male and female wages by their share of hours worked in 1999 from ABS Cat No 6291.0.55.003 data cube E06, ‘Employed Persons by Sex, Industry, State, Status in Employment’. This wage profile is normalised so that wages in the first year of life are 2.5.

Time-varying weight on leisure (b₁,b₂ and b₃): average ages of retirement for males and females in 2002 are from ‘Comparison of Methods for Measuring the Age of Withdrawal from the Labour Force’, ABS Research Paper 1351.0.55.009. The weights on male and female retirement ages are the averages of each gender's share of the labour force for the four quarters of 2002 from ABS Cat No 6202.0. To determine the age when labour-force participation begins to decline more rapidly we construct a series of age-specific participation rates for a representative agent using data from ABS Cat No 6291.0.55.001 data cube LM8, ‘Labour Force Status by Sex, State, Age, Marital Status’. The representative agent is a weighted average of male and female labour-force participation where the weights are each gender's share of the total labour force over the same period (the March quarter 2002), also from ABS Cat No 6202.0. Visual inspection of this series shows that labour-force participation begins to decline more quickly at around age 50.

Labour share of income (1 – α): average over 1995–2005 calculated from ABS Cat No 5206.0, Table 41.

Real rate of capital depreciation (δ): average over 1995–2005 calculated from depreciation rates inferred from ABS Cat No 5204.0, Table 69.