nep-age New Economics Papers
on Economics of Ageing
Issue of 2007‒11‒10
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. What Makes Retirees Happier: A Gradual or 'Cold Turkey' Retirement? By Calvo, Esteban; Haverstick, Kelly; Sass, Steven
  2. Does Working Longer Make People Healthier and Happier? By Calvo, Esteban
  3. Aging of a giant: a stochastic population forecast for China, 2001-2050 By Qiang Li; Mieke Reuser; Cornelia Kraus; Juha Alho
  4. Age structure and productivity growth By Sevilla, Jaypee

  1. By: Calvo, Esteban; Haverstick, Kelly; Sass, Steven
    Abstract: This study explores the factors that affect an individual’s happiness while transitioning into retirement. Recent studies highlight gradual retirement as an attractive option to older workers as they approach full retirement. However, it is not clear whether phasing or cold turkey makes for a happier retirement. Using longitudinal data from the Health and Retirement Study, this study explores what shapes the change in happiness between the last wave of full employment and the first wave of full retirement. Results suggest that what really matters is not the type of transition (gradual retirement or cold turkey), but whether people perceive the transition as chosen or forced.
    Keywords: happiness; retirement; gradual; phased; control; work; transition; psychological well-being; policy
    JEL: J26 I31
    Date: 2007
  2. By: Calvo, Esteban
    Abstract: PURPOSE: This study addresses the impact of late-life paid work on physical and psychological well-being. METHODS: Longitudinal data was drawn from the Health and Retirement Survey and the RAND-HRS data base for more than 6,000 individuals aged 59 to 69 who were working or not-working in the year 2000 and were alive in 2002. Well-being was assessed by using a set of six measures including: self-rated health; self-rated memory; activities of daily living; instrumental activities of daily living and mood indicators. The study controls for previous well-being status in 1998 and for demographic and socioeconomic factors. RESULTS: Those who worked in 2000 tended to report greater well-being in 2002 than those who did not work in 2000, even after introducing rigorous controls (p<.01). Working in undesirable jobs changes the favorable effects of paid work on mood indicators and mortality. For those forced into retirement (20% of the sample), work is not an alternative. IMPLICATIONS: This study suggests that late-life work will help most people maintain their overall well-being. While working longer seems beneficial for most people, it will likely have negative consequences for some. The type of job seems to be a critical factor. Another critical factor is the opportunity to continue working. Older workers may be willing to prolong paid work, but, in order to find a job, they need to be able to work and have a real demand for their labor. Gerontologists and policymakers need to consider these factors when evaluating proposals to keep people in the labor force.
    Keywords: work; retirement; health; happiness; mortality; well-being; old age; policy; job satisfaction; control
    JEL: J21 I10 I12 J26 I31 J28
    Date: 2006
  3. By: Qiang Li (Max Planck Institute for Demographic Research, Rostock, Germany); Mieke Reuser (Max Planck Institute for Demographic Research, Rostock, Germany); Cornelia Kraus (Max Planck Institute for Demographic Research, Rostock, Germany); Juha Alho
    Abstract: This paper presents a stochastic population forecast for China with a special emphasis on population aging. Stochastic forecasting methods have the advantage of producing a projection of the future population including a probabilistic prediction interval. The socalled scaled model for error was used to quantify the uncertainty attached to the population predictions in this study. Data scarcity was a major problem in the specification of the expected error of the population forecast. Therefore, the error structures estimated for European countries were employed with some modifications taking the large size and heterogeneity of the Chinese population into account. The stochastic forecast confirms the expectation of extremely rapid population aging during the first half of the 21st century in China. The old age dependency ratio (OADR) will increase with certainty. By mid-century, with 80% probability, the OADR will lie between 0.41 and 0.56, with the median of the predictive distribution being 0.48, nearly five-fold its current value of 0.1. In particular, the oldest-old population will grow faster than any other age group. This development has major implications for China: to smoothly adjust current birth control policies to less restrictive ones, strengthen the family support system, and improve the social security system for the elderly.
    Keywords: China
    JEL: J1 Z0
    Date: 2007–10
  4. By: Sevilla, Jaypee (Harvard School of Public Health)
    Abstract: Among the most central questions at the intersection of demography and economics is the impact of large scale demographic processes on long-run economic performance. The classical version of this inquiry, occupying thinkers from Malthus towards those from the mid-to-late 20th century, had to do with whether rapid population growth threatened economic growth. This classical inquiry has been superseded by more sophisticated questioning in which the focus on growth rate of the aggregate population has been replaced by focus on the growth rates of age-specific population sub-groups. Disaggregating the effects of population growth by age-group is generally accepted to be a fundamental improvement over classical inquiry because people’s economic roles and contributions vary by age: the young are net consumers and beneficiaries of human capital investments, adults are net producers and savers, and the old are (at least in theory or to a greater degree than adults) net consumers. Thus the economic consequences of rapid growth in the population size of the young and the elderly could potentially have a depressing impact on growth, while rapid growth in the population size of adults could stimulate growth. <p> The demographic transition brings with it a three stage process in which a baby boom cohort moves through the population’s age pyramid. The life cycle of this cohort creates a first stage in which there is rapid growth in youth population, then a second stage in which there is rapid growth in the adult population, and finally a third stage in which there is rapid growth in the elderly population. The first and third stages can be thought of as the challenging stages since economies must confront the challenge of providing for large dependent populations. However, the second stage can be thought of as a demographic gift or dividend stage since growth in the productive adult population can potentially boost economic growth. <p> The traditional mechanisms for the demographic dividend include the impact of the boom cohort on labor supply, savings, and human capital. However, it seems to us that there has been no research on the potential impact of age structure on technological progress, which is unusual since all standard accounts of economic growth hold that in the long run, it is technological progress that is the sole source of improvement in living standards. Demographic impacts on technology could well dwarf the importance of everything else. <p> There are two competing hypotheses regarding demographic processes and technological progress. One holds that a rapidly growing adult population stimulates technological progress, while the other holds that it retards it. Analyzing cross-country macro data from developing countries for the period 1970 to 2000, we find that entry of the baby boom cohort into the adult stage is correlated with higher labor productivity, even after controlling for capital accumulation and past productivity. Our evidence supports the view that the demographic dividend includes positive impacts on technological progress, which may in the long-run prove more consequential than any other demographic dividend consequences.
    Keywords: age structure; productivity growth; demographic transition
    JEL: J10
    Date: 2007–08

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