nep-age New Economics Papers
on Economics of Ageing
Issue of 2008‒04‒21
five papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Public Pensions and Elderly Mortality in Canada: Comparing Means tested and Universal Eligibility, 1921 – 1966 By Herbert Emery; Jesse Matheson
  2. The Employment Effect of Stricter Rules for Eligibility for DI: Evidence from a Natural Experiment in Sweden By Karlström, Anders; Palme, Mårten; Svensson, Ingemar
  3. A Closer Look at the Relationship Between Life Expectancy and Economic Growth By Azomahou, Théophile; Boucekkine, Raouf; Diene, Bity
  4. Understanding Poverty among the Elderly in India: Implications for Social Pension Policy By Pal, Sarmistha; Palacios, Robert
  5. Immigration can alleviate the ageing problem By Muysken Joan; Cörvers Frank; Ziesemer Thomas

  1. By: Herbert Emery; Jesse Matheson
    Abstract: We investigate the impact of three public pension programs on the mortality rates of recipient age groups in Canada. The Old Age Pension (OAP), introduced in 1927 for Canadians over age 70, and Old Age Assistance (OAA), implemented in 1952 for Canadians aged 65–69, were means tested programs while Old Age Security (OAS), introduced in 1952 for Canadians over age 70, was a universal plan. Our data consist of age-specific mortality rates and pension information, by province, for the period 1921–1966. The three dimensional feature of this panel allows us to exploit variation in policy implementation dates across provinces, and changes in income and age group eligibility. We find that the implementation of all three pension programs resulted in statistically significant reductions in recipient age group mortality rates and that the effect of the federal universal OAS of 1952 was twice as large as either of the means tested plans. However, the number of lives extended with the universal OAS was small and the estimated cost per life extended large.
    JEL: H51 H53 H55 I18 I32 I38 J14 N32
    Date: 2008–01–14
  2. By: Karlström, Anders (Systems Analysis and Economics, Royal Institute of Technology); Palme, Mårten (Dept. of Economics, Stockholm University); Svensson, Ingemar (Social Insurance Agency)
    Abstract: We study the effect of a reform of the Swedish disability insurance (DI) program whereby the special eligibility rules for workers in the age group 60 to 64 were abolished. First, we use a differences-in-differences approach to study changes in the disability take-up as compared to the age group 55 to 59. Then, we use a similar approach to study to what extent the employment effect of the reform is "crowded out" by an increase in the utilization of the sickpay insurance (SI) and/or the unemployment insurance (UI). In an extended analysis, we study the effect of firm closure on employment and the utilization of different labor market insurance programs in different age groups before and after the reform.
    Keywords: Disability Insurance; Early Retirement
    JEL: H53 H55 H59 J21 J26
    Date: 2008–04–11
  3. By: Azomahou, Théophile (UNU-MERIT); Boucekkine, Raouf (CORE, Universite Catholique de Louvain); Diene, Bity (BETA, Universite Louis Pasteur, Strasbourg)
    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 perpetual 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 two models departing from perpetual youth" by assuming successively age-dependent earnings and age-dependent survival probabilities. With age-dependent earnings, the obtained relationship is hump-shaped while agedependent survival laws do reproduce the convex-concave shape detected in the prior empirical study.
    Keywords: Life expectancy, economic growth, perpetual youth, age-dependent mortality, nonparametric estimation
    JEL: O41 I20 J10
    Date: 2008
  4. By: Pal, Sarmistha (Brunel University); Palacios, Robert (World Bank)
    Abstract: The Government of India is implementing a new policy which dramatically increases funding for a cash transfer program targeted to the poor elderly. The expansion of this ‘social pension’ in terms of coverage and benefit levels is taking place with little understanding of poverty among India’s elderly or its determinants. This paper finds that households with elderly members do not have higher poverty rates than non-elderly households. This result is robust under various measures that take into account the size and composition of households. Separate evidence suggests that part of the explanation for this phenomenon is that the poor have higher mortality rates and are therefore underrepresented. This explanation has important implications for social pension policy and suggests that programs that reduce elderly mortality may actually increase the relative poverty levels of the elderly.
    Keywords: old age poverty, household demographic composition, adjusted poverty indices, elderly contribution, survivorship bias
    Date: 2008–04
  5. By: Muysken Joan; Cörvers Frank; Ziesemer Thomas (METEOR)
    Abstract: This paper analyses the way immigration can help to alleviate the burden ageing presents for the welfare states of most Western Economies. We develop a macroeconomic framework which deals with the impact of both ageing and immigration on economic growth. This is combined with a detailed model of the labour market, to include the interaction with unemployment, while distinguishing between low- and high-skilled labour. The empirical relevance of some crucial model assumptions are shown to hold for the Netherlands, 1973 – 2005. The conclusions are that immigration will help to alleviate the ageing problem, as long as the immigrants will be able to find work. Moreover, the better educated the immigrants are or become, the higher their contribution to growth will be.
    Keywords: macroeconomics ;
    Date: 2008

This nep-age issue is ©2008 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.