nep-age New Economics Papers
on Economics of Ageing
Issue of 2008‒06‒21
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Self-Employment Transitions among Older American Workers with Career Jobs By Michael D. Giandrea; Kevin E. Cahill; Joseph F. Quinn
  2. Private Wealth and Job Exit at Older Age: a Random Effects Model By Hans Bloemen
  3. Global Aging and Declining World Interest Rates: Macroeconomic Insurance Through Pension Reform in Cyprus By Mario Catalán; Jaime Guajardo; Alexander W. Hoffmaister
  4. Do We Want to Measure the Quality of Care for Vulnerable Older People? The ACOVE Approach. Syracuse Seminar on Aging. By Neil S. Wenger
  5. Do early life and contemporaneous macroconditions explain health at older ages? An application to functional limitations of Dutch older individuals. By France Portrait; Rob Alessie; Dorly Deeg
  6. The Importance of Financial Incentives on Retirement Choices By Michele Belloni; Rob Alessie

  1. By: Michael D. Giandrea (U.S. Bureau of Labor Statistics); Kevin E. Cahill (Analysis Group, Inc.); Joseph F. Quinn (Boston College)
    Abstract: What role does self-employment play in the retirement process? Older Americans are staying in the labor force longer than prior trends would have predicted and many change jobs later in life. These job transitions are often within the same occupation or across occupations within wage- and-salary employment. The transition can also be out of wage-and-salary work and into self employment. Indeed, national statistics show that self employment becomes more prevalent with age, partly because self employment provides older workers with opportunities not found in traditional wage-and-salary jobs, such as flexibility in hours worked and independence. This paper analyzes transitions into and out of self employment among older workers who have had career jobs. We utilize the Health and Retirement Study, a nationally-representative dataset of older Americans, to investigate the prevalence of self employment among older workers who made a job transition later in life and to explore the factors that determine the choice of wage- and-salary employment or self employment. We find that post-career transitions into and out of self employment are common and that health status, career occupation, and financial variables are important determinants of these transitions. As older Americans and the country as a whole face financial strains in retirement income in the years ahead, self employment may be a vital part of the pro-work solution.
    Date: 2008–04–10
  2. By: Hans Bloemen (VU University Amsterdam)
    Abstract: Private wealth holdings are likely to become an increasingly important determinant in the job exit decision of elderly workers. Net wealth may correlate with worker's characteristics that also determine the exit out of a job. It is therefore important to include a rich set of observed characteristics in an empirical model for retirement in order to measure the (marginal) effect of wealth on the job exit rate. But even with a rich set of regressors the question remains whether there are unobservable worker's characteristics that affect both net wealth and the job exit rate. We specify a simultaneous equations model for job exit transitions with multiple destinations, net wealth, and the initial labour market state. The job exit rates and the net wealth equation contain random effects. We allow for correlation between the random effects of job exit and net wealth, and the initial labour market state.
    Keywords: Retirement; Life Cycle Models and Saving
    JEL: J26 D91
    Date: 2008–03–06
  3. By: Mario Catalán; Jaime Guajardo; Alexander W. Hoffmaister
    Abstract: How will the world-wide decline in real interest rates associated with global aging affect small open economies (SOEs) with aging populations? Lower interest rates will result in higher capital-labor ratios and increased wages; higher wages, in turn, will be passed on to pension benefits, exacerbating aging-related fiscal pressures. The pass-through effect will be stronger if pensions are indexed to nominal wages rather than prices. Using an overlapping generations model, the paper illustrates the interest rates transmission mechanism and its interaction with pension indexation for the case of Cyprus. In addition, the paper evaluates the capacity of pension reforms to insure the economy against long-run movements in world interest rates. It concludes that pension reforms, particularly those that change the indexation of pensions from wages to prices, provide substantial macro-insurance and shock absorption benefits.
    Date: 2008–04–24
  4. By: Neil S. Wenger (University of California at Los Angeles; RAND Health)
    Abstract: There's limited information available about measuring the quality of medical care that is targeted to the needs of older patients. And there's very limited pressure on the system to provide high quality geriatric care. Why is that? Because the quality measures haven't been adequately developed and implemented, and it's more difficult to measure care for an older sample. Measuring care for ill older adults is complex, because they tend to have multiple medical conditions, and they demonstrate substantial variation in goals for care (Wenger and colleagues 2007). The Assessing Care of Vulnerable Elders (ACOVE) project began in 1998 as a collaboration between RAND Health and Pzizer Inc to develop and apply quality indicators (QIs) for assessment and treatment targeted at vulnerable older persons. The project involved defining and identifying the target population, identifying health conditions that cover much of the medical care provided to this population, developing quality-of-care indicators to measure how well those conditions are being addressed, and applying thoseindicators to determine the actual quality of care received by older adults.
    Keywords: health care, medical care, elderly, assessment, geriatrics, gerontology
    JEL: H51 I10 I18 J14
    Date: 2008–06
  5. By: France Portrait; Rob Alessie; Dorly Deeg
    Abstract: The paper presents an approach which thoroughly assesses the role of early life and contemporaneous macro-conditions in explaining health at older ages. In particular, we investigate the role of exposure to infectious diseases and economic conditions during infancy and childhood, as well as the effect of current health care facilities. Specific attention is paid to the impact of unobserved heterogeneity, selective attrition and omitted relevant macro-variables. We apply our approach to self-reports on functional limitations of Dutch older individuals. Our analysis is performed using data from the Longitudinal Aging Study Amsterdam. The prevalence of functional limitations is found to increase in the nineteen-nineties, in part due to restricted access to hospital care.
    Keywords: Panel Data, Wage Distribution, Inequality, Mobility
    JEL: C23 D31 J31 J60
    Date: 2008–05
  6. By: Michele Belloni (CeRP, Collegio Carlo Alberto); Rob Alessie (Utrecht University, and Netspar)
    Abstract: This study exploits a new dataset in order to quantify the effect of financial incentives on retirement choices. This dataset contains for the first time in Italy information on seniority. In accordance with the general finding in Gruber and Wise (2004), we find that financial incentives have an effect on retirement. The effect goes in the expected direction; when employees become eligible for pension benefits the change in financial incentives they experience is so high that their retirement probability increases in a sizable way. We also find that the procedure to impute seniority used in previous studies leads to a sizable measurement error. Due to this measurement error, the key parameters of the model are inconsistently estimated. Our sensitivity analysis suggests that the lack of appropriate information on seniority is an important reason for the unclear evidence so far obtained in retirement studies for Italy.
    Keywords: retirement; social security wealth; seniority; unobserved heterogeneity
    JEL: J2
    Date: 2008–05–22

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