nep-age New Economics Papers
on Economics of Ageing
Issue of 2007‒11‒24
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Training and early Retirement By Montizaan Raymond; Coervers Frank; Grip Andries de
  3. The labor market for direct care workers By Reagan Baughman; Kristin Smith
  4. The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach By Agar Brugiavini; Erich Battistin,; Enrico Rettore; Guglielmo Weber
  5. Born To Be Mild? Cohort Effects Don’t (Fully) Explain Why Well-Being Is U-Shaped in Age By Andrew E. Clark
  6. Long-Run Longevity Effects of a Nutritional Shock Early in Life: The Dutch Potato Famine of 1846-1847 By Gerard J. van den Berg; Maarten Lindeboom; France Portrait
  7. Demography and Innovative Entrepreneurship By Werner Bönte; Oliver Falck; Stephan Heblich

  1. By: Montizaan Raymond; Coervers Frank; Grip Andries de (ROA rm)
    Abstract: In this paper we analyze how retirement behavior is affected by a worker’s firm-specific or general training history. Using US data from the National Longitudinal Survey of Older Men and controlling for the effects of technological change and workers’ retirement preferences, we find that workers with a firm-specific training history retire earlier than workers with a general training background. This indicates that shared investments in firm-specific training are embedded in upward sloping earning profiles that create productivity-wage differentials for older workers.
    Keywords: education, training and the labour market;
    Date: 2007
  2. By: Alejandra Cattaneo (Socioeconomic Institute, University of Zurich); Stefan C. Wolter (Institute of Economics, University of Berne)
    Abstract: Empirical research has given cause to fear that the demographic ageing in industrialized countries is likely to exert a negative impact on educational spending. These papers have linked the share of the elderly with the per capita or per pupil spending on education at the local, state-wide or national level, trying to control for other exogenous effects. Although this line of research shows in many cases a negative correlation between the shares of elderly people and educational expenditures, a causal link is difficult to prove. This paper uses a unique and representative survey of Swiss voters of all age groups. The analysis shows that elderly people present a clear tendency to be less willing to spend money on education. They would rather prefer to spend public resources on health and social security than on education. Furthermore the paper shows that much of the negative correlation between the shares of elderly and educational spending is the result of the elderly being politically more conservative and in general less inclined to pay for expenditures in the public sector as a whole.
    Keywords: public finance, education finance, demographics, survey, Switzerland
    JEL: H52 H72 I22 J18
    Date: 2007
  3. By: Reagan Baughman; Kristin Smith
    Abstract: As the baby boom cohort nears retirement age, the question of how to provide necessary health care and personal services to a growing elderly population has become a looming policy problem. Beginning in 2020, the number of Americans over the age of 65 will surpass the number of primary providers of formal and informal long-term care (women between the ages of 20 and 44). Perceptions of shortage and very high turnover in today’s direct care labor market are compounding the potential problem. ; This paper provides an overview of the labor market for direct care workers in the United States, including comprehensive empirical analyses of wage determination and labor supply, using panel data from the 1996 and 2001 Surveys of Income and Program Participation (SIPP). The paper describes the ways in which public policy is expected to affect the direct care labor market and empirically analyzes the wages, health insurance coverage, and employment duration of direct care workers. The authors find both that wages of direct care workers are quite low, with median starting wage of $7.96, and that spells of employment with a given employer are short, averaging just under 10 months.
    Keywords: Medical care ; Labor market ; Baby boom generation
    Date: 2007
  4. By: Agar Brugiavini (Department of Economics, University Of Venice Cà Foscari); Erich Battistin, (University of Padova); Enrico Rettore (University of Padova); Guglielmo Weber (University of Padova)
    Abstract: In this paper we investigate the size of the consumption drop at retirement in Italy. We use micro data on food and total non-durable household spending covering the period 1993-2004, and evaluate the change in consumption that accompanies retirement by exploiting the exogenous variability in pension eligibility to correct for the endogenous nature of the retirement decision. We take a regression discontinuity design approach, and make the identifying assumption that consumption would be the same around the threshold for pension eligibility if individuals would not retire. We check in our data that a non-negligible fraction of individuals retire as soon as they become eligible, and estimate at 9.8% the part of the non-durable consumption drop that is associated with retirement induced by eligibility. We show that such fall is not driven by liquidity problems for the less well off in the population, and can be accounted for by drops in goods that are work-related expenses or leisure substitutes. However, we also show that retirement induces a significant drop in the number of grown children living with their parents, and this can account for most of the retirement consumption drop.
    Keywords: Consumption, Regression Discontinuity Design, Retirement
    JEL: D9 E2
    Date: 2005
  5. By: Andrew E. Clark (Paris School of Economics and IZA)
    Abstract: The statistical analysis of cross-section data very often reveals a U-shaped relationship between subjective well-being and age. This paper uses fourteen waves of British panel data to distinguish between two potential explanations of this shape: a pure life-cycle or aging effect, and a fixed cohort effect depending on year of birth. Panel analysis controlling for fixed effects continues to produce a U-shaped relationship between well-being and age, although this U-shape is flatter for life satisfaction than for the GHQ measure of mental well-being. The pattern of the estimated cohort effects also differs between the two well-being measures and, to an extent, by demographic group. In particular, those born earlier report more positive GHQ scores, controlling for their current age; this phenomenon is especially prevalent for women.
    Keywords: subjective well-being, cohorts, fixed effects, panel data
    JEL: C23 I3 J11
    Date: 2007–11
  6. By: Gerard J. van den Berg (Free University Amsterdam, IFAU-Uppsala, CEPR, IFS, Netspar and IZA); Maarten Lindeboom (Free University Amsterdam, HEB-Bergen, Tinbergen Institute, Netspar and IZA); France Portrait (Free University Amsterdam and Tinbergen Institute)
    Abstract: Background: Nutrition in utero and infancy may causally affect health and mortality at old ages. Until now, very few studies have demonstrated long-run effects on survival of early life nutrition, mainly because of data limitations and confounding issues. Methods: This paper investigates whether exposure to nutritional shocks in early life negatively affects longevity at older ages, using unique individual data and exploiting the exogenous variation implied by natural experiments. In particular, early nutritional conditions are instrumented by exposure to the potato famine of unprecedented severity that the Dutch faced in 1846-47. The individual data are from the Historical Sample of the Netherlands and are augmented by food price data and macro-economic data. The sample used in the study covers lifetimes of 398 individuals exposed and 1,342 individuals not exposed to severe famine during gestation and/or till age three. We compare non-parametrically the total and residual lifetimes of treated and controls per gender. We also estimate survival models in which we control for other individual characteristics and additional (early life) determinants of mortality. Results: Men exposed to severe famine during pregnancy (at least four months) and directly after birth have a significant lower residual life expectancy at age 50 than others, but not at earlier ages. We could not demonstrate any long-run effects for men exposed at ages 0-2 and for women. Conclusion: To our knowledge, this is the first evidence suggesting long-run effects of early nutritional stresses on mortality at old ages for men.
    Keywords: nutrition in early life, famine, longevity, natural experiments, survival analysis, mortality, food intake, developmental origins, fetal origins
    JEL: N33 J10 I10
    Date: 2007–10
  7. By: Werner Bönte (Max Planck Institute of Economics, Entrepreneurship, Growth, and Public Policy Group); Oliver Falck (Ifo Institute for Economic Research and CESifo); Stephan Heblich (Max Planck Institute of Economics, Entrepreneurship, Growth, and Public Policy Group)
    Abstract: Demographic change will be one of the major challenges for economic policy in the developed world in the next decades. In this article, we analyze the relationship between age structure and the number of startups. We argue that an individual's decision to start a business is determined by his or her age and, therefore, that a change in a region's age distribution affects the expected number of startups in the region. Using German regional data, we estimate a count-data model and find that the expected number of startups is positively influenced by the fraction of individuals of working age? 20-64 years old. A more detailed analysis of the working-age distribution suggests that startups in knowledge-based (high-tech) manufacturing industries are affected by changes in this distribution whereas firms in other industries are not. In particular, increases in the fraction of individuals in the 20-30 age range and individuals in the 40-50 age range have a positive effect on the number of high-tech startups.
    Keywords: Demography, Age Distribution, Entrepreneurship, Innovation, Region
    JEL: J1 L26 O3 R11
    Date: 2007–11–12

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.