nep-age New Economics Papers
on Economics of Ageing
Issue of 2007‒11‒17
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Health and Retirement among Older Workers By Eugenio Zucchelli; Anthony Harris; Nigel Rice; Andrew M. Jones
  2. Assessing Alternative Financing Methods for the Canadian Health Care System in View of Population Aging By Doug Andrews
  3. A closer look at the relationship between life expectancy and economic growth By Raouf Boucekkine; Bity Diene; Theophile Azomahou
  4. The Political-Economy Positive Role of the Social Security System in Sustaining Immigration (But Not Vice Versa) By Edith Sand; Assaf Razin

  1. By: Eugenio Zucchelli; Anthony Harris; Nigel Rice; Andrew M. Jones
    Abstract: This paper investigates the causal relationship between ill-health and retirement among older working individuals. We represent the transition to retirement as a discrete-time hazard model using a stock-sample from the first five waves (2001- 2005) of the Household, Income and Labour Dynamics in Australia (HILDA) Survey. Our results show that health plays an important role in individual retirement decisions and that negative shocks to health greatly increase the hazard of retirement, especially for men. This is true for both a measure of health limitations and a measure of latent health obtained using pooled ordered probit models, as well as for three alternative health shock measures. We also consider the effects of partners’ health and labour market status on an individual’s retirement decision. Our estimates suggest that partners’ characteristics do not significantly influence individual retirement choices.
    Keywords: health, health shocks, discrete-time hazard model, retirement.
    Date: 2007–08
  2. By: Doug Andrews
    Abstract: The cost of the Canadian health care system is approximately 10% of Gross Domestic Product (GDP). Survey-evidence suggests that Canadians do not wish to have additional funds spent on health care but believe that the system should be able to deliver better quality care. Due to low fertility rates and increasing life expectancy, the Canadian population is aging. Over the next 25 years, the dependency ratio will increase, primarily due to the aging of the “baby boom generation” 2. This will place twofold cost pressures on governments responsible for maintaining the health care system: 1) As a consequence of increased life expectancy, on average, Canadians will have a longer period of health care consumption. Although age-specific cost may not increase, with an aging population aggregate annual health care expenditures are expected to increase. 2) The dependency ratio is a proxy for the ability of the population to support itself. The increasing dependency rate may result in a slowdown in GDP growth, given constant technology. In Section I, this paper attempts to quantify these factors. A single measure combining cost and quality is developed to demonstrate the magnitude of the challenge. In Section II, this paper examines a number of different approaches to health care financing including user fees and alternative compensation methods for physicians. The paper highlights documented information from Canada and international experience on the implementation issues involved. The paper evaluates the desirability of implementing these approaches in Canada.
    Keywords: Alternative physician reimbursement models, Capitation, DALE, Disability Adjusted Life Expectancy, QAHE, Quality-Adjusted Health Expenditures, QAHE Index, SID, Supplier-Induced Demand
    JEL: I19
    Date: 2007–11
  3. By: Raouf Boucekkine; Bity Diene; Theophile Azomahou
    Abstract: We first provide a nonparametric inference of the relationship between life expectancy and economic growth on an historical data for 18 countries over the period 1820-2005. The obtained shape shows up convexity for low enough values of life expectancy and concavity for large enough values. We then study this relationship on a benchmark model combining "per- petual youth" and learning-by-investing. In such a benchmark, the generated relationship between life expectancy and economic growth is shown to be strictly increasing and concave. We finally examine a model departing from "perpetual youth" by assuming age-dependent survival probabilities. We show that life-cycle behavior combined with age-dependent sur- vival laws can reproduce our empirical finding.
    Keywords: Life expectancy, economic growth, perpetual youth, age-dependent mortality, nonparametric estimation
    JEL: O41 I20 J10
    Date: 2007–08
  4. By: Edith Sand; Assaf Razin
    Abstract: In the political-economy debate people express the idea that immigrants are good because they can help pay for the old, thus help sustaining the social security system. In addition, the median voter whose income derives from wages will wish to keep out the immigrants who will depress his/her wage. Therefore the decisive voter will keep migrants out. The paper addresses these two accepted propositions. For this purpose we develop an OLG political economy model of social security and migration to explore how migration policy and a pay-as-you-go (PAYG) social security system are jointly determined. The sub-game perfect Markov , depends on the different patterns of fertility rates among native born and migrants. Our analysis demonstrates that a social security system may change the first proposition significantly because the median voter may opt to bring in migrants to help him/her during retirement. As for the second proposition we get a significantly nuanced version. Not always immigration helps sustain the social security.
    JEL: E6 H1
    Date: 2007–11

This nep-age issue is ©2007 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.