nep-age New Economics Papers
on Economics of Ageing
Issue of 2007‒09‒16
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Population aging, labor demand, and the structure of wages By Margarita Sapozhnikov; Robert K. Triest
  2. The Aging Population and the Size of the Welfare State: Is There a Puzzle? By Cameron A. Shelton
  3. Global Aging Pressures: Impact of Fiscal Adjustment, Policy Cooperation, and Structural Reforms By Dennis P. J. Botman; Manmohan S. Kumar
  4. Personality, Job Satisfaction and Health - The Mediating Influence of Affectivity By Justina A.V. Fischer; Alfonso Sousa-Poza
  5. Ensuring Fiscal Sustainability in G-7 Countries By Daniel Leigh; David Hauner; Michael Skaarup
  6. A transição demográfica no contexto internacional By Fausto Brito
  7. A transição demográfica no Brasil: as possibilidades e os desafios para a economia e a sociedade By Fausto Brito

  1. By: Margarita Sapozhnikov; Robert K. Triest
    Abstract: One consequence of demographic change is substantial shifts in the age distribution of the working age population. As the baby boom generation ages, the usual historical pattern of there being a high ratio of younger workers relative to older workers is increasingly being replaced by a pattern of there being roughly equal percentages of workers of different ages. One might expect that the increasing relative supply of older workers would lower the wage premium paid for older, more experienced workers. ; This paper provides strong empirical support for this hypothesis. Econometric estimates imply that the size of one’s birth cohort affects wages throughout one’s working life, with members of relatively large cohorts (at all stages of their careers) earning a significantly lower wage than members of smaller cohorts. The cohort size effect is of approximately the same magnitude for men and for women. Our results suggest that cohort size effects are quantitatively important and should be incorporated into public policy analyses.
    Date: 2007
  2. By: Cameron A. Shelton (Economics Department, Wesleyan University)
    Abstract: Razin, Sadka, and Swagel (2002) unveil a puzzling fact: the welfare state appears to be shrinking even as the dependency ratio rises. While they formulate an elegant political economy model to explain the coexistence of an aging population and declining transfers, the resolution of the puzzle turns out to be much simpler. Labor tax rates and per capita transfers are negatively correlated with the dependency ratio in advanced economies only because this measure includes children as well as retirees. Both labor tax rates and per capita transfers in advanced economies are, in fact, historically positively correlated with the ratio of retirees to the working-age population and negatively correlated with the ratio of children to the working-age population. Increasing the number of retirees shifts preferences toward higher taxes and transfers by increasing the fraction of the population that receives transfers. In contrast, workers with more children prefer to spend more of their lifetime income while raising dependents, so they prefer smaller public pension systems. These results suggest that fiscal leakage from workers to retirees is not required to explain the broad trends in the transfer policies of advanced economies.
    Keywords: dependency ratio, welfare state
    Date: 2007–01
  3. By: Dennis P. J. Botman; Manmohan S. Kumar
    Abstract: Demographic pressures will materialize in many economies over the next few decades. We examine the macroeconomic impact of alternative fiscal adjustment and structural reform strategies to address these global aging pressures using the IMF's Global Fiscal Model (GFM). The results suggest substantial spillover effects of aging through international financial channels. To maintain sustainability, fiscal adjustment needs to be broad-based, while avoiding increases in direct taxes. There are substantial benefits from fiscal cooperation, while negative growth effects can be offset by complementary structural reforms in product and labor markets with the benefits accruing early and to all incomegroups.
    Date: 2007–08–02
  4. By: Justina A.V. Fischer; Alfonso Sousa-Poza
    Abstract: This paper evaluates the relationship between job satisfaction and measures of health of workers over 50 using the Swiss Household Panel (SHP) and cross-sectional data from the Survey on Health, Ageing and Retirement in Europe (SHARE). Methodologically, it addresses two important design problems encountered frequently in the literature: (a) cross-sectional causality problems and (b) absence of objective measures of physical health and intellectual ability that complement self-reported measures of health status. Not only does using the SHP panel structure with job satisfaction lagged mitigate the simultaneity bias, employing the objective health measures in the SHARE dataset addresses measurement problems resulting from respondents’ affective states. For all datasets, we find a positive link between job satisfaction and self-report health measures; that is, employees with higher job satisfaction levels feel healthier, are less depressed, and report fewer impediments in their daily activities. However, once objective measures of physical health are employed, we observe no such link. Rather, the only positive relationship is for intellectual abilities. These primary findings are then tested using additional controls for working conditions, prior health state and affective mental state. The results indicate that job satisfaction partly serves as a transmission channel.
    Keywords: job satisfaction, health, panel data analysis
    JEL: I18 I19 J28
    Date: 2007–08
  5. By: Daniel Leigh; David Hauner; Michael Skaarup
    Abstract: Rising longevity, falling fertility rates, and the retirement of the baby boom generation will substantially raise age-related government spending in most advanced and many emerging market countries. This paper assesses the evolution of fiscal sustainability for each of the G-7 countries using two standard primary gap indicators. The estimated fiscal adjustment required to ensure long-run fiscal sustainability is substantial for all G-7 countries. In particular, ensuring fiscal sustainability would require an average improvement in the primary balance of about 4 percentage points of GDP. While the overall adjustment required to achieve long-run fiscal sustainability in G-7 countries is large, there are significant growth benefits to putting public finances on a sustainable footing in the near term versus delayed adjustment.
    Date: 2007–07–30
  6. By: Fausto Brito (Cedeplar-UFMG)
    Abstract: The goal of this article is to analyze the international context in which the demographic transition in Brazil is inserted: the context in which the world population moves towards zero growth, still in this century, in 2075, approximately, when it will have its maximum size, around 9,2 billion inhabitants. What would explain this radical change from a trajectory in direction to a demographic explosion to a trajectory in direction to the zero population growth? The deep and general decline of the fertility in the developing countries, not predicted even by the demographers. These demographic changes, the reduction of the population growth and its repercussions on the age structure, will be analyzed according to the different regions of the planet. Some developed countries, France and Italy, and the countries with the largest population in the world, China and India, will be highlighted.
    Keywords: demographic transition; zero growth; decline in fertility; developed countries; developing countries
    JEL: J11
    Date: 2007–09
  7. By: Fausto Brito (Cedeplar-UFMG)
    Abstract: Between 1940 and 2000, 129 million inhabitants were added to the Brazilian population, an average of 21,5 million per decade. In the first half of XXI century, estimatives suggest, on average, an addition of 90 million inhabitants to the Brazilian population, 2,5 times the population of Argentina in 2005, 18 million inhabitants per decade. Less than in the previous century, but still a considerable population. This is the first demographic question to be analyzed in this article, from the perspective of its consequences for the public policies design. The second is the reduction of the fertility and not only its impact in the growth of the population, but also in the age structure. From the perspective of the transition of the age structure, three phenomena must be considered: reduction of the relative weight of the young population; increase of the degree of population aging, the ratio of people with sixty and five years of age or more; and the growth of the working-age population until 2050. The set of public policies that are conditioned by the age structure of the population, for example, the policies in the field of education, health, labor market and social security, must take into account the demographic changes. Otherwise, its efficiency will be reduced and it will not fulfill its main goal: economic development with reduction of the social inequalities.
    Keywords: population growth; decline in fertility; age structure; public policies; Brazil
    JEL: J11 J18
    Date: 2007–09

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