nep-age New Economics Papers
on Economics of Ageing
Issue of 2008‒06‒13
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Young, the Old, and the Restless: Demographics and Business Cycle Volatility By Nir Jaimovich; Henry E. Siu
  2. The Distribution of Unemployment by Age and the Unemployment Rate - A Puzzle? By Carsten Ochsen
  3. Asset Allocation and Location over the Life Cycle with Survival-Contingent Payouts By Wolfram J. Horneff; Raimond H. Maurer; Olivia S. Mitchell; Michael Z. Stamos
  4. Zum Einkommensreichtum Älterer in Deutschland- Neue Reichtumskennzahlen und Ergebnisse aus der Lohnund Einkommensteuerstatistik (FAST 2001) By Böhm, Paul; Merz, Joachim

  1. By: Nir Jaimovich; Henry E. Siu
    Abstract: We investigate the consequences of demographic change for business cycle analysis. We find that changes in the age composition of the labor force account for a significant fraction of the variation in business cycle volatility observed in the U.S. and other G7 economies. During the postwar period, these countries experienced dramatic demographic change, although details regarding timing and nature differ from place to place. Using panel-data methods, we exploit this variation to show that the age composition of the workforce has a large and statistically significant effect on cyclical volatility. We conclude by relating these findings to the recent decline in U.S. business cycle volatility. Through simple quantitative accounting exercises, we find that demographic change accounts for approximately one-fifth to one-third of this moderation.
    JEL: E0 E3
    Date: 2008–06
  2. By: Carsten Ochsen (University of Rostock)
    Abstract: This paper examines the effects of the distribution of unemployment by age on the level of unemployment. We provide an extension of the standard equilibrium unemployment model that allows for age dependent job finding probabilities and quit rates. In the empirical part of the paper we apply a panel estimator on data for a set of OECD countries to test the implications of the theoretical model. The results provide the somewhat surprising evidence that the distribution of unemployment by age has a hump-shape effect on the unemployment rate.
    Keywords: Distribution of Unemployment by Age, Duration of Unemployment
    JEL: J11 J64
    Date: 2008
  3. By: Wolfram J. Horneff; Raimond H. Maurer; Olivia S. Mitchell; Michael Z. Stamos
    Abstract: This paper shows how lifelong survival-contingent payouts can enhance investor wellbeing in the context of a portfolio choice model which integrates uninsurable labor income and asymmetric mortality expectations. Our model generates optimal asset location patterns indicating how much to hold in liquid versus illiquid survival-contingent payouts over the lifetime, and also asset allocation paths, showing how to invest in stocks versus bonds. We confirm that the investor will gradually move money out of her liquid saving into survival-contingent assets to retirement and beyond, thereby enhancing her welfare by as much as 50 percent. The results are also robust to the introduction of uninsurable consumption shocks in housing expenses, income flows during the worklife and retirement, sudden changes in health status, and medical expenses.
    JEL: G11 G22 G23 H55 J26 J32
    Date: 2008–06
  4. By: Böhm, Paul; Merz, Joachim
    Abstract: This contribution analyzes income richness of elder persons in Germany in 2001. Using actual data of the German Wage and Income Tax Statistics, which are particularly suitable for the analysis of high incomes, new richness indices are discussed and new results are presented. It appears that the the number of rich people in upper age groups are below the average. But deepening results point out the fact that the richness intensity and the concentration of high income are particularly pronounced for upper age groups. Taking into account partial components, which are necessary to the representation of richness, an above-average relevance of income richness can be ascertained for the elderly in Germany in 2001.
    Keywords: Einkommensverteilung; Einkommensreichtum; Reichtumskennzahlen; ältere Menschen.
    JEL: D31 J14 J10 D30
    Date: 2008–01

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