nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒07‒11
sixteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Effect of Pension Generosity on Early Retirement: A Microdata Analysis for Europe from 1967 to 2004 By Justina A. V. Fischer; Alfonso Sousa-Poza
  2. Labour Supply Effects of a Subsidised Old-Age Part-Time Scheme in Austria By Nikolaus Graf; Helmut Hofer; Rudolf Winter-Ebmer
  3. How Does Retirement Affect Health? By Behncke, Stefanie
  4. Cognition and Economic Outcomes in the Health and Retirement Survey By McArdle, John J.; Smith, James P.; Willis, Robert
  5. Labor Force Participation among Indian Elderly: Does Health Matter? By Manoj K. Pandey
  6. Why do the Elderly Save? The Role of Medical Expenses By Mariacristina De Nardi; Eric French; John Bailey Jones
  7. Poverty and Disability among Indian Elderly: Evidence from Household Survey By Manoj K. Pandey
  8. Will You Still Need Me – When I'm 64? By van Ours, Jan C.
  9. On Ageing, Health and Poverty in Rural India By Manoj K. Pandey
  10. Is Demeny Voting the Answer to Low Fertility in Japan? By Aoki, Reiko; Vaithianathan, Rhema
  11. Will There Be a Shortage of Skilled Labor? An East German Perspective to 2015 By Herbert S. Buscher; Eva Dettmann; Marco Sunder; Dirk Trocka
  12. Supplier Density and At-home Care Use in Japan: Evidence from a Micro-level Survey on Long Term Care Receivers By Noguchi, Haruko; Shimizutani, Satoshi
  13. On adaptation, life-extension possibilities and the demand for health By Gjerde, Jon; Grepperud, Sverre; Kverndokk, Snorre
  14. The Impact of Age on the Ability to Perform under Pressure: Golfers on the PGA Tour By Fried, Harold O.; Tauer, Loren W.
  15. What is best and at what cost? Cross-national differences in the treatment of ageing-related diseases Norwegian perspective from a comparative OECD-project By Botten, Grete; Hagen, Terje P.
  16. Participation in disability benefit programmes. A partial identification analysis of the British Attendance Allowance system By Pudney S

  1. By: Justina A. V. Fischer; Alfonso Sousa-Poza
    Abstract: Using pseudo-panel microdata we show that pension generosity affects early retirement decisions. The changes in the average replacement rate and decreases in wealth accrual between 1967 and 2004 have caused an increase in early retirement probabilities from 16% to 63%.
    Keywords: Early Retirement; Pension Systems; Pension Neutrality; Pension Generosity; SHARE
    JEL: J26 J21 H55
    Date: 2009–06
  2. By: Nikolaus Graf (Institute for Advanced Studies, Vienna, Austria); Helmut Hofer (Institute for Advanced Studies, Vienna, Austria); Rudolf Winter-Ebmer
    Abstract: In this paper we evaluate the impact of the old-age part-time scheme (OAPT) on the Austrian labour market which was a policy to allow flexible retirement options for the elderly with an aim to increase labour supply. According to our matching estimates employment probability increases slightly, especially in the first two years after entrance into the programme. Furthermore, the programme seems to reduce the measured unemployment risk. However, the total number of hours worked is significantly reduced by OAPT. While the policy is meant to reduce early exit from the labour force by allowing part-time work, our analysis indicates that most workers substitute part-time work for full-time work and thus the overall effect is rather negative.
    Keywords: evaluation of labour market programmes, labour supply of the elderly, nearest neighbour matching
    JEL: C31 J14 J26
    Date: 2009–06
  3. By: Behncke, Stefanie (University of St. Gallen)
    Abstract: This paper investigates the effects of retirement on various health outcomes. Data stem from the first three waves of the English Longitudinal Study of Ageing (ELSA). With this informative data, non-parametric matching methods can be applied to identify causal effects. It is found that retirement significantly increases the risk of being diagnosed with a chronic condition. In particular, it raises the risk of developing a cardiovascular disease and being diagnosed with cancer. Estimates also indicate that retirement has quite diverse effects for different individuals.
    Keywords: retirement, health, matching methods, ELSA
    JEL: I10 J14 J26
    Date: 2009–06
  4. By: McArdle, John J. (University of Southern California); Smith, James P. (RAND); Willis, Robert (University of Michigan)
    Abstract: Dimensions of cognitive skills are potentially important but often neglected determinants of the central economic outcomes that shape overall well-being over the life course. There exists enormous variation among households in their rates of wealth accumulation, their holdings of financial assets, and the relative risk in their chosen asset portfolios that have proven difficult to explain by conventional demographic factors, the amount of bequests they receive or anticipating giving, and the level of economic resources of the household. These may be cognitively demanding decisions at any age but especially so at older ages. This research examines the association of cognitive skills with wealth, wealth growth, and wealth composition for people in their pre and post-retirement years.
    Keywords: cognition, financial outcomes
    JEL: G10
    Date: 2009–06
  5. By: Manoj K. Pandey
    Abstract: The paper analyzes the effect of health status on labour force participation for aged Indians. The potential endogeneity in health and labour force participation has been taken care of by using full information maximum likelihood (FIML) and estimation results are compared with alternative two-stage methods. Results show that health has a significant and positive effect on labour force participation of the aged. In order to keep enough supply of elderly in the labour market, sufficient health care is necessary and hence more investment in this sector is imperative.
    Keywords: self-reported health status, labour force participation, elderly, endogeneity, exogeneity, simultaneous equation model
    JEL: J21 J14 I18 C35
    Date: 2009
  6. By: Mariacristina De Nardi; Eric French; John Bailey Jones
    Abstract: This paper constructs a rich model of saving for retired single people. Our framework allows for bequest motives and heterogeneity in medical expenses and life expectancies. We estimate the model using AHEAD data and the method of simulated moments. The data show that out-of-pocket medical expenses rise quickly with both age and permanent income. For many elderly people the risk of living long and requiring expensive medical care is a more important driver of old age saving than the desire to leave bequests. Social insurance programs such as Medicaid rationalize the low asset holdings of the poorest. These government programs, however, also benefit the rich because they insure them against their worst nightmares about their very old age: either not being able to afford the medical care that they need, or being left destitute by huge medical bills.
    JEL: D91 E21 H31
    Date: 2009–07
  7. By: Manoj K. Pandey
    Abstract: This paper attempts to analyze the depth of poverty and examines the causal relationship between disability and poverty among Indian elderly. We use 58th round of National Sample Survey Organisation (NSSO) data surveyed in 2002. Our analysis finds higher level of poverty and income inequality among disabled elderly as compared to non-disabled elderly and those differences in the income levels vary significantly across different age groups, gender, social groups and educational status. Finally, the estimation results confirm the hypothesis of causal relationship between poverty and disability.
    Keywords: poverty, disability, inequality, poverty measures, elderly, estimation
    JEL: I32 J14 D63 C13
    Date: 2009
  8. By: van Ours, Jan C. (Tilburg University)
    Abstract: For various reasons the relationship between age and productivity is a matter of policy concern. I present new empirical research showing how productivity is affected by age. I study age effects at the individual level by analyzing data on running and publishing in economic journals. Furthermore I present empirical evidence at the firm level on the relationship between age, wage and productivity. In particular I address the potential wage-productivity gap that might occur at higher ages. I conclude that the productivity of older workers indeed decreases with their age. Nevertheless, the decline is limited. Furthermore, I find no evidence of a pay-productivity at higher ages.
    Keywords: age, productivity, matched worker-firm data
    JEL: J14 J24 J31
    Date: 2009–06
  9. By: Manoj K. Pandey
    Abstract: In this paper, the trend and determinants of health and poverty among the elderly in rural India is analysed. Two rounds of National Sample Survey (NSS) data for the year 1995-96 and 2004 are employed. The analysis has been done with independent and pooled datasets. Our analysis shows that levels of consumption poverty have declined marginally between 1995-96 and 2004 while increased proportion of elderly with poor health status is continued. Results suggest that poverty is one of the key determinants of health among elderly in rural India.
    Keywords: health, poverty, elderly
    JEL: I32 J14 I12
    Date: 2009
  10. By: Aoki, Reiko; Vaithianathan, Rhema
    Abstract: Japan has the oldest population in the world, and experienced an unprecedented decrease in fertility rates during the post-war period. Despite the well recognized need to provide pronatalist policies, Japan lags behind other developed countries in the generosity of its family benefits. Part of the reason for this is the large voting bloc presented by those in, or close to, retirement, and the weak political power of parents and children. We argue that to reverse the trend, Japan should introduce a Demeny Voting rule, which allows parents to vote on behalf of their children. Such a change would signal a commitment to ongoing generous family policies which in turn would increase fertility.
    Date: 2009–06
  11. By: Herbert S. Buscher; Eva Dettmann; Marco Sunder; Dirk Trocka
    Abstract: We analyze the supply and demand of skilled labor in an East German federal state, Thuringia. This state has been facing high unemployment in the course of economic transformation and experiences population ageing and shrinking more rapidly than most West European regions. In a first step, we use extrapolation techniques to forecast labor supply and demand for the period 2009-2015, disaggregated by type of qualification. The analysis does not corroborate the notion of an imminent skilled-labor shortage but provides hints for a tightening labor market for skilled workers. In the second step, we ask firms about their appraisal of future recruitment conditions, and both current and planned strategies in the context of personnel management. The majority of firms plan to expand further education efforts and hire older workers. The study closes with policy recommendations to prevent occupational mismatch.
    Date: 2009–06
  12. By: Noguchi, Haruko; Shimizutani, Satoshi
    Abstract: Following the introduction of the long-term care insurance scheme and deregulation of the market for at-home care services, Japan experienced a substantial increase in expenditure on care for the elderly. Using household-level survey data, we empirically examine whether the increase in care expenditure is associated with supplier density springing from the rise in the number of care providers following deregulation. We provide weak evidence that supplier density in the at-home care market is positively correlated with probability to use care or expenditure on care. Moreover, we find no link between the share of for-profit providers and the demand for at-home care services.
    Keywords: supplier density, at-home care, long-term care insurance
    JEL: I11
    Date: 2009–06
  13. By: Gjerde, Jon (Norwegian Computing Center); Grepperud, Sverre (Institute of Health Management and Health Economics); Kverndokk, Snorre (Ragnar Frisch Centre for Economic Research)
    Abstract: A good health is important for having a good life. This is supported by surveys on happiness. However, at least after a certain age, the health state deteriorates naturally over time due to ageing. Nevertheless, research reports show that old people in average are satisfied with their health conditions. This and other empirical evidence indicate that individuals adapt to poorer health conditions. But how will this adaptation influence the demand for health services? <p> Gjerde, Grepperud and Kverndokk will in this paper analyse the impacts of adaptation to a falling health state on the demand for health and medical care. This is done by integrating adaptation processes in the pure consumption model of Grossman. The authors will modify the consumption-model in another direction by introducing an uncertain lifetime. Model simulations show that adaptation affects the health variables by lowering the incentives to invest in health, as well as smoothening the optimal health stock path over the life cycle. Whether or not the risk of mortality is an object of choice has important effects on the joint development of the health variables.
    Keywords: Grossman; Demand for health; Adaptation; Life extension; Ageing.
    JEL: C61 D91 I12
    Date: 2009–06–30
  14. By: Fried, Harold O.; Tauer, Loren W.
    Abstract: This paper is about aging and the ability to perform under pressure on the PGA tour. Performance increases with golfing skill, but may first increase and then decrease with age as experience interacts with changes in physical condition. Similarly, mental fortitude or the ability of a golfer to perform under pressure may first increase and then decrease with age as experience interacts with changes in the ability to concentrate. Net performance on the tour is the result of both physical golfing skill and the ability to perform under pressure. We control for changes in physical skill and focus on the mental side of the game. The role of experience suggests an inverted U shaped relationship between age and mental performance that could vary significantly across golfers. We use Order-m FDH to calculate a measure of performance under pressure, and we confirm an inverted U-shaped curve with age. Along the way, we examine the ability to perform under pressure at the level of the individual golfer.
    Keywords: age, efficiency, order-m FDH, golf, performance under pressure, Productivity Analysis,
    Date: 2009–06–11
  15. By: Botten, Grete (Institute of Health Management and Health Economics); Hagen, Terje P. (Institute of Health Management and Health Economics)
    Abstract: Aggregated medical spending differs widely across countries and large variations exist in the frequency and the mix of medical services provided, as well as the type of technology applied. The outcomes (mostly measured as survival rates) do not, however vary to the same extent as the spending. Policy makers in many countries compare their spending to each other, with no clear consensus about how systems are effective in treating patients. In each of these debates the issue of what medical care is buying arises: When countries spend more or less on health care, how does that affect resource allocation in the medical sector and ultimately the health outcomes? <p> The goal of the project1 was to examine how different medical care systems will affect the allocation of resources in the medical sector. As the existing available macro data at an international level does not allow for satisfactory answers to such questions, this project wanted to use a microeconomic approach. An international comparison of treatments of conditions in older populations that lead to high expenditures could help to identify treatments that might be more effective in improving outcomes at lower cost. Therefore the project focused on international comparisons of treatments for a spectrum of conditions in older populations with high aggregate medical spending, well identified episodes of care, high prevalence and high policy relevance. Norway participated in studies on myocardial infarction and breast cancer 2. The choice of focus on older patients was partly motivated by the fact that in the future the elderly will probably take an increasingly proportion of the total spending in the health care sector. <p> See documentation from the main project:,,EN-do cument-194-5-no-27-32316-0,00.html
    Keywords: Medical care; allocation of resources; acute myocardial infarction; breast cancer; international comparisons of treatments
    JEL: I18
    Date: 2009–06–29
  16. By: Pudney S (Institute for Social and Economic Research)
    Abstract: We investigate the processes underlying payment of Attendance Allowance (AA) in the older UK population, using a partial identification approach. Receipt of AA requires that (i) a claim is made and (ii) programme administrators assess the claim as warranting an award. These processes cannot be analysed directly because we observe neither potentially successful unpursued claims, nor rejected claims. Combining survey data with weak prior restrictions and aggregate information on claim success rates, we are able to distinguish clearly the behaviour of potential claimants and assessors. Results suggest that there are many potentially successful AA claims which are not pursued.
    Date: 2009–06–25

This nep-age issue is ©2009 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.