nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒04‒13
nine papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Optimal Unemployment Insurance for Older Workers By Hairault, Jean-Olivier; Langot, François; Ménard, Sébastien; Sopraseuth, Thepthida
  2. A Structural Approach to Estimating the Effect of Taxation on the Labor Market Dynamics of Older Workers By Haan, Peter; Prowse, Victoria L.
  3. Retiree Health Benefits and the Decision to Retire By James Marton; Stephen A. Woodbury
  4. Care regimes and national employment models By Annamaria Simonazzi
  5. Enabling conditions for second pillars of pension systems By Rudolph, Heinz; Rocha, Roberto
  6. Stochastic environmental effects, demographic variation, and economic growth By Azomahou, Theophile; Mishra, Tapas
  7. How to avoid a pension crisis: A question of intelligent system design. By Alessandro Cigno
  8. The Health Insurance Puzzle in Europe: The Role of Information By Ciro Avitabile
  9. The U-Shape without Controls By Blanchflower, David G.; Oswald, Andrew J.

  1. By: Hairault, Jean-Olivier (University of Paris 1); Langot, François (University of Le Mans); Ménard, Sébastien (GAINS, Université du Maine); Sopraseuth, Thepthida (GAINS, Université du Maine)
    Abstract: This paper shows that optimal unemployment insurance contracts are age-dependent. Older workers have only a few years left on the labor market prior to retirement. This short horizon implies a more digressive replacement ratio. However, there is a sufficiently short distance to retirement for which flat unemployment benefits can be the optimal contract as the nearly retired unemployed workers rationally expect never to suffer from the punishment. This is why imposing a tax on the future job is particularly efficient in the context of older workers because the agency can now reward the job search by present employment subsidies. Moreover, we propose adopting a global approach to unemployment insurance by determining an optimal contract that integrates unemployment insurance and retirement pension systems.
    Keywords: unemployment insurance, retirement, recursive contracts, moral hazard
    JEL: C61 J64 J65
    Date: 2009–03
  2. By: Haan, Peter (DIW Berlin); Prowse, Victoria L. (University of Oxford)
    Abstract: We estimate a dynamic structural life-cycle model of employment, non-employment and retirement that includes endogenous accumulation of human capital and intertemporal non-separabilities in preferences. Additionally, the model accounts for the effect of the tax and transfer system on work incentives. The structural parameter estimates are used to evaluate the effects of a tax reform targeted at low income individuals on employment behavior and retirement decisions.
    Keywords: life-cycle labor supply, income taxation
    JEL: C23 C25 J22 J64
    Date: 2009–03
  3. By: James Marton (Georgia State University); Stephen A. Woodbury (W.E. Upjohn Institute and Michigan State University)
    Abstract: We estimate the effect of employer offers of retiree health benefits (RHBs) on the timing of retirement using a sample of men observed over a period of up to 12 years in the Health and Retirement Study (HRS). Our main concern is that such estimates may be contaminated by unobserved heterogeneity—workers with a taste for early retirement sort into jobs offering RHBs. We attempt to address this concern by using a fixed-effects estimator, which yields substantially smaller estimates of the effect of RHB offers than estimators that do not attempt to control for unobservables. The findings suggest that an RHB offer increased the probability of retirement by 14 percent on average for men born between 1931 and 1941.
    Keywords: Retirement; Health Insurance; Employee Benefits; Unobserved Effects
    JEL: J26 I18 D14
    Date: 2009–03
  4. By: Annamaria Simonazzi
    Abstract: Rapid population ageing has dramatically increased the social and economic cost of elderly care. Demand for care labour is increasing rapidly, and all countries are experiencing problems in recruiting enough workers to meet demand. In some countries, the shortage of care workers has been met by a large inflow of immigrant, mostly female, workers. The paper’s aim is twofold. To argue that the way in which care is provided and financed may entail large differences in the creation of a formal care market. Provision in kind and ‘tied’ monetary transfers - that is, cash benefits that are somehow regulated – may prevent the formation of a large informal care market. National employment models in turn shape the features of the care labour market: in fact, they affect the quantity and the quality of the care labour supply, the size of the care labour shortage, and the degree of dependence on migrant carers. We show how these two factors combine to shape the characteristics of care regimes and their long term sustainability.
    JEL: F22 I3 J3 O15
    Date: 2008–06
  5. By: Rudolph, Heinz; Rocha, Roberto
    Abstract: This note adds to the existing literature by examining the enabling conditions for the creation of mandatory funded pension funds, and identifying additional factors that are important to consider in the early stages of the reform. The note stresses the importance of some factors that had already been identified in previous literature but not fully observed by reforming countries, including the strong and lasting commitment of the authorities with the reform, the fiscal commitment with the reform, and some basic financial infrastructure. The analysis is also extended to analyze the role of supervision in the early stages of the reform and the role of the government in fostering the development of the domestic capital market.
    Keywords: Debt Markets,Emerging Markets,,Access to Finance,Banks&Banking Reform
    Date: 2009–04–01
  6. By: Azomahou, Theophile (UNU-MERIT); Mishra, Tapas (School of Business and Economics, University of Wales Swansea)
    Abstract: We consider a stochastic environment to study interactions among pollution growth, demographic changes, and economic growth. Drawing on the empirical findings of slow convergence patterns of pollution shocks (viz., with a long-memory), we build an analytical framework where stochastic environmental feedback effects on population changes are reflected upon aggregate economic growth. Long-memory in economic growth, in our model, is shown to arise due to the inherent stochasticity in environmental and demographic system. Empirical results for a set of developed and developing countries generally support our conjecture. Simulation experiment is carried out to lend additional support to this claim.
    Keywords: Environmental Quality, Long-memory, Demographic Dynamics, Economic Growth
    JEL: C13 J11 O47
    Date: 2009
  7. By: Alessandro Cigno
    Abstract: Conventional pension systems suffer from a design defect which makes them financially unsustainable, and a source of inefficiency for the economy as a whole. The paper outlines a second-best policy which includes a public pension system made up of two parallel schemes, a Bismarckian one allowing individuals to qualify for a pension by working and paying contributions in the usual way, and an unconventional one allowing them to qualify for a pension by having children, and investing time and money in their upbringing.
    Keywords: Pension reform, implicit pension taxes and subsidies, child benefits, fertility, labour productivity.
    JEL: D13 D64 H55 J13 J14 J26
    Date: 2009–01
  8. By: Ciro Avitabile (University College London, University of Naples Federico II and CSEF)
    Abstract: I use microdata from the Survey of Health, Ageing and Retirement in Europe to study whether the cost of acquiring health information is an important determinant of the decision to buy private hospital health insurance for individuals aged 50+, in eight European countries. I first test whether, conditional on health insurance companies' risk assessments, individuals have residual private information on insurance determinants other than their risk type. My results show that there are individual characteristics, not observed by the insurers, that are positively correlated with hospital insurance coverage and negatively correlated with the ex post probability of requiring hospital treatment. However, this opposite association is significantly different from zero only in countries with low quality healthcare systems. I then provide evidence that education and cognitive ability act as substitutes for quality of health promotion in determining the propensity to take out a voluntary private hospital insurance.
    Keywords: Health Insurance, Cognitive Ability, Healthcare Quality
    JEL: D83 G22 I18
    Date: 2009–04–01
  9. By: Blanchflower, David G. (Dartmouth College, USA and University of Stirling, UK.); Oswald, Andrew J. (University of Warwick, UK.)
    Abstract: This paper is a continuation of results in Blanchflower and Oswald (2008). It provides new evidence that well-being follows a curve through life. We use data on half a million randomly sampled individuals across eight major European nations. Importantly, we show that in this set of countries there is a U-shape even in unadjusted data, that is, without the inclusion of control variables. But we also advise against a focus on elementary bivariate associations.
    Keywords: Happiness ; aging ; well-being ; mental-health ; depression ; life-course
    JEL: D1 I3
    Date: 2009

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