nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒04‒05
eight papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Cooperation and Competition in Intergenerational Experiments in the Field and in the Laboratory By Gary Charness; Marie-Claire Villeval
  2. The Cost of Low Fertility in Europe By David E. Bloom; David Canning; Günther Fink; Jocelyn E. Finlay
  3. The retirement consumption puzzle: evidence from a regression discontinuity approach By Erich Battistin; Agar Brugiavini; Enrico Rettore; Guglielmo Weber
  4. The Long-Term Care Workforce: Overview and Strategies to Adapt Supply to a Growing Demand By Rie Fujisawa; Francesca Colombo
  5. The Age Effect in Entrepreneurship: Founder's Tenure, Firm;Performance, and the Economic Environment By Marco Cucculelli; Giacinto Micucci
  6. Hungarian Pension System and its Reform By András Simonovits
  7. Decomposing changes in the aggregate labor force participation rate By Julie L. Hotchkiss
  8. Coping with Chronic Disease? Chronic Disease and Disability in Elderly American Population 1982-1999 By Gabriel Aranovich; Jay Bhattacharya; Alan M. Garber; Thomas E. MaCurdy

  1. By: Gary Charness (Department of Economics - University of California, Santa Barbara); Marie-Claire Villeval (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: There is economic pressure towards the postponement of the retirement age, but employers are still reluctant to employ older workers. We investigate the comparative behavior of juniors and seniors in experiments conducted both onsite with the employees of two large firms and in a conventional laboratory environment with students and retirees. We show that seniors are no more risk averse than juniors and are typically more cooperative; both juniors and working seniors respond strongly to competition. The implication is that it may be beneficial to define additional incentives near the end of the career to motivate and retain older workers.
    Keywords: Age; performance; diversity; stereotypes; cooperation; competition; inter-generational games; experiments
    Date: 2009
  2. By: David E. Bloom; David Canning; Günther Fink; Jocelyn E. Finlay
    Abstract: We analyze the effect of fertility on income per capita with a particular focus on the experience of Europe. For European countries with below-replacement fertility, the cost of continued low fertility will only be observed in the long run. We show that in the short run, a fall in the fertility rate will lower the youth dependency ratio and increase the working-age share, thus raising income per capita. In the long run, however, the burden of old-age dependency dominates the youth dependency decline, and continued low fertility will lead to small working-age shares in the absence of large migration inflows. We show that the currently very high working-age shares generated by the recent declines in fertility and migration inflows are not sustainable, and that significant drops in the relative size of the working-age population should be expected. Without substantial adjustments in labor force participation or migration policies, the potential negative repercussions on the European economy are large.
    JEL: J13 J21 O52
    Date: 2009–03
  3. By: Erich Battistin (Institute for Fiscal Studies); Agar Brugiavini (Institute for Fiscal Studies and University of Venice); Enrico Rettore; Guglielmo Weber (Institute for Fiscal Studies and University of Padua)
    Abstract: <p><p>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 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.</p></p>
    Keywords: Consumption, regression discontinuity design, retirement
    JEL: D9 E2
    Date: 2008–07
  4. By: Rie Fujisawa; Francesca Colombo
    Abstract: This working paper offers an overview of the LTC workforce and reviews country responses to a growing demand for LTC workers. In the context of ageing societies, the importance of long-term care is growing in all OECD countries. In 2005, long-term care expenditure accounted for slightly over 1% of GDP across OECD countries (OECD Health Data 2008), but this is projected to reach between 2% and 4% of GDP by 2050 (Oliveira Martins et al., 2006). Spending on long-term care as a share of GDP rises with the share of the population that is over 80 years old, which is expected to triple from 4 per cent to 11-12 per cent between 2005 and 2050. In addition to ageing, there are other factors likely to affect future spending. Trends in severe disability among elderly populations across 12 OECD countries for which data are available do not show a consistent sign of decline (Lafortune and Balestat, 2007), while the number of elderly that need assistance in carrying out activities of daily living is also growing. Meanwhile, societal changes – notably possible reductions in the importance of informal care due to rising labour market participation by women and declining family size, as well as growing expectations for more responsive, quality health and social-care systems – are creating pressures to improve value for money in long-term care systems. These factors add pressures on the workforce of this highly labour-intensive sector. Adding to this are the difficulties in attracting and retaining caregivers to a physically and mentally gruelling profession.<P>Soins de longue durée: l'accroissement de la demande de travailleurs du secteur<BR>Ce document de travail présente une vue d’ensemble sur les travailleurs du secteur des soins de longue durée (SLD) et passe en revue les réponses des pays à l'accroissement de la demande de travailleurs des SLD. Dans le contexte du vieillissement des sociétés, l’importance des soins de longue durée va se développer dans tous les pays de l’OCDE. En 2005, les dépenses de SLD ne représentaient guère plus de 1 % du PIB dans ces différents pays (Éco-Santé OCDE 2008), mais d’après les projections, cette proportion pourrait atteindre entre 2 et 4 % du PIB à l’horizon 2050 (Oliveira Martins et al., 2006). La part des dépenses de SLD exprimées en pourcentage du PIB augmente en même temps que s’accroît la part de la population âgée de plus de 80 ans. Or, cette part devrait tripler entre 2005 et 2050 et passer de 4 % à 11 ou 12 % sur cette période. Outre le vieillissement, d’autres facteurs pouvant affecter les dépenses futures sont impliqués. Dans 12 pays de l’OCDE pour lesquels on dispose de données, la tendance à l’incapacité sévère chez les personnes âgées ne diminue pas de manière régulière (Lafortune et Balestat, 2007), tandis que le nombre de personnes âgées ayant besoin d’aide pour accomplir les activités élémentaires de la vie quotidienne est en augmentation. En même temps, l’évolution de la société (notamment, la possible diminution d’importance qui devrait être accordée aux soins informels du fait de l’accroissement du taux d’activité des femmes et de la diminution de la taille des familles, mais aussi les attentes croissantes face à des systèmes de soins de santé et de protection sociale que l’on voudrait plus réactifs et de meilleure qualité) accroît la nécessité d’une utilisation plus efficiente des ressources des systèmes de SLD. Ces facteurs renforcent la pression qui s’exerce sur les travailleurs de ce secteur à très forte intensité de main-d’oeuvre. S’y ajoutent les difficultés rencontrées pour attirer des soignants vers un métier pénible à la fois physiquement et psychologiquement et pour les retenir.
    JEL: I1 I10 I12 J1 J10 J14 J20 J61
    Date: 2009–03–17
  5. By: Marco Cucculelli (Universit… Politecnica delle Marche, Department of Management and Insutrial Organization); Giacinto Micucci (Banf of Italy)
    Abstract: This paper tests the effect of founder's tenure on firm performance by taking into account the impact of the changes occurring in the economic environment. We use a large dataset of founder-run firms that includes, in addition to financial data, company data directly collected through a survey of about 2,000 Italian firms. Unlike the negative relationship reported in most empirical papers, we found an inverted U-shaped relationship between founder-CEO tenure and firm performance. This relationship is strongly influenced by the characteristics of the environment in which the company competes: while experience plays a key role in fostering performance in less innovative and less competitive sectors, a dynamic environment makes the performance of the firm less responsive to the benefits of founder tenure. From the viewpoint of policy, growing environment dynamism calls for greater efficiency of the market for corporate control, in order to assure a continued match between skills of CEOs and the external environment.
    Keywords: ageing, changing environment, entrepreneurship, founder-run firms
    JEL: G34 J24 L25
    Date: 2009–03
  6. By: András Simonovits (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: The goal of this study is to present an insider view on the pension reforms implemented in Hungary between 1996 and 2009. Both political economy as well as institutional economics will be used as the main approaches to analyse and explain the reform process and some of its effects. The following studies provide valuable insights: Palacios and Rocha (1998), Bokros and Dethier eds. (1998), Augusztinovics (1999), Augusztinovics et al. (2002), Simonovits (1999), (2000), (2008a), Czúcz and Pintér (2002), European Commission (2006), Gál (2006), Impavido and Rocha (2006), and Guardiancich (2008). The structure of the paper is as follows: Section 1 considers the legacy of the pension system. Section 2 summarises the debate on the pension reform and the basic decisions. Section 3 outlines the implementation of the pension reform, while Section 4 discusses the implementation problems. Section 5 describes the changes since the reform, while Section 6 analyses and Section 7 evaluates the reform. An Appendix discusses the issues of contribution rates.
    Keywords: Hungary, pension reform, social security, private pension
    JEL: H55 J14 J26 J32
    Date: 2009–03
  7. By: Julie L. Hotchkiss
    Abstract: This paper presents a simple methodology for decomposing changes in the aggregate labor force participation rate (LFPR) over time into demographic group changes in labor force participation behavior and in population share. The purpose is to identify the relative importance of behavioral changes and population changes as driving forces behind changes in the aggregate LFPR. incompl s
    Keywords: labor force participation, decomposition, forecasting CL HG2567 A4A5
    Date: 2009
  8. By: Gabriel Aranovich; Jay Bhattacharya; Alan M. Garber; Thomas E. MaCurdy
    Abstract: It is well known that disability rates among the American elderly have declined over the past decades. The cause of this decline is less well established. In this paper, we test one important possible explanation--that the decline in disability occurred because of chronic disease prevention efforts among the elderly. For this purpose we analyze data from the National Long Term Care Survey and from the National Health and Interview Survey. Our findings suggest that primary prevention, as reflected in decreased disease prevalence, was not responsible for advances made in elderly functioning between 1980 and 2000. We found a broad decline in less severe forms of disability that is unlikely to have resulted from improved disease management. Instead, these measured improvements in functioning may reflect environmental, technological, and/or socioeconomic changes. Improvements in the more severe forms of disability were modest and were restricted to those suffering from particular illnesses, which make improved and/or more aggressive management a plausible explanation and one that might increase costs should the trend persist.
    JEL: I1 I18
    Date: 2009–03

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