nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒06‒03
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Increasing the Legal Retirement Age: The Impact on Wages, Worker Flows and Firm Performance By Martins, Pedro S.; Novo, Álvaro A.; Portugal, Pedro
  2. Early Retirement and Inequality in Britain and Germany : How Important Is Health? By Jennifer Roberts; Nigel Rice; Andrew M. Jones
  3. Informal Care and Labor Supply By Fevang, Elisabeth; Kvrendokk, Snorre; Røed, Knut
  4. A model for supply of informal care to elderly parents By Fevang, Elisabeth; Kverndokk, Snorre; Røed, Knut

  1. By: Martins, Pedro S. (Queen Mary, University of London); Novo, Álvaro A. (Banco de Portugal); Portugal, Pedro (Universidade Nova de Lisboa)
    Abstract: Many pay-as-you-go pension systems have increased or plan to increase their legal retirement age (LRA) to address the financial consequences of ageing. Although the success of these policies is ultimately determined at the labour market, little is known about the effects of higher LRAs at the firm level. Here, we identify this effect by considering a legislative reform introduced in Portugal in 1994: women's LRA was gradually increased from 62 to 65 years while men's LRA stayed unchanged at 65. Using detailed matched employer-employee panel data and difference-in-differences matching methods, we analyse the effects of the reform in terms of a number of worker- and firm-level outcomes. After providing evidence of compliance with the law, we find that the wages and hours worked of older women (those required to work longer) were virtually unchanged. However, firms employing older female workers significantly reduced their hirings, especially of younger female workers. Those firms also lowered their output although not their output per worker.
    Keywords: social security reform, older workers, matching estimators
    JEL: J14 J26 J63
    Date: 2009–05
  2. By: Jennifer Roberts; Nigel Rice; Andrew M. Jones
    Abstract: Both health and income inequalities have been shown to be much greater in Britain than in Germany. One of the main reasons seems to be the difference in the relative position of the retired, who, in Britain, are much more concentrated in the lower income groups. Inequality analysis reveals that while the distribution of health shocks is more concentrated among those on low incomes in Britain, early retirement is more concentrated among those on high incomes. In contrast, in Germany, both health shocks and early retirement are more concentrated among those with low incomes. We use comparable longitudinal data sets from Britain and Germany to estimate hazard models of the effect of health on early retirement. The hazard models show that health is a key determinant of the retirement hazard for both men and women in Britain and Germany. The size of the health effect appears large compared to the other variables. Designing financial incentives to encourage people to work for longer may not be sufficient as a policy tool if people are leaving the labour market involuntarily due to health problems.
    Keywords: health, early retirement, hazard models
    JEL: J26 I10 C23 C41
    Date: 2009
  3. By: Fevang, Elisabeth (Ragnar Frisch Centre for Economic Research); Kvrendokk, Snorre (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: Based on Norwegian register data we show that having a lone parent in the terminal phase of life significantly affects the offspring’s labor market activity. The employment propen-sity declines by around 1 percentage point among sons and 2 percentage points among daughters during the years just prior to the parent’s death, ceteris paribus. Long-term sickness absence increases sharply. The probability of being a long-term social security claimant (defined as being a claimant for at least three months during a year) rises with as much as 4 percentage points for sons and 2 percentage points for daughters. After the par-ent’s demise, earnings tend to rise for those still in employment while the employment propensity continues to decline. The higher rate of social security dependency persists for several years.
    Keywords: Elderly care; labor supply; ageing; inheritance
    JEL: J14 J22
    Date: 2009–06–02
  4. By: Fevang, Elisabeth (Ragnar Frisch Centre for Economic Research); Kverndokk, Snorre (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: This paper presents a model of informal care to parents. We assume that the child participates in the labour market and gains in utility from consumption and leisure. In addition it has altruistic motivation to give informal care to its elderly parent. We show how the labour income, labour supply and informal caregiving are affected by exogenous factors such as the education level, wage rate, other supply of care, travel distance and inheritance.
    Keywords: informal care for elderly; labour market; elderly parent
    JEL: J22
    Date: 2009–06–02

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