nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒08‒02
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Why do the elderly save? the role of medical expenses By Mariacristina De Nardi; Eric French; John Bailey Jones
  2. The Portfolio Effect of Pension Reforms By Renata Bottazzi; Tullio Jappelli; Mario Padula
  3. Demographic and Geographic Determinants of Regional Physician Supply By Michael Kuhn; Carsten Ochsen
  4. Inter-temporal and Inter-Industry Effects of Population Ageing: A General Equilibrium Assessment for Canada By Annabi, Nabil; Fougère, Maxime; Harvey, Simon

  1. 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.
    Date: 2009
  2. By: Renata Bottazzi (University of Bologna, IFS and CHILD); Tullio Jappelli (University of Naples “Federico II”, CSEF, and CEPR); Mario Padula (University “Ca’ Foscari” of Venice and CSEF)
    Abstract: We estimate the portfolio effect of changes in social security wealth exploiting a decade of Italian pension reforms as a source of exogenous variation. The Italian Survey of Household Income and Wealth records detailed portfolio data and elicits expectations of retirement outcomes, thus allowing us to measure the expected social security wealth and to assess to what extent Italian households perceive the innovations brought about by the reforms. We find that households have responded to the cut in pension benefits mostly by increasing real estate wealth, and that the response is stronger among households that are able to estimate more accurately future social security benefits. We also compute that for the average household consumable wealth increases by 40 percent of the reduction in social security wealth.
    Keywords: Pension Reform, Portfolio Choice, Retirement Saving
    JEL: H55 E21
    Date: 2009–07–10
  3. By: Michael Kuhn (Vienna Institute of Demography); Carsten Ochsen (University of Rostock)
    Abstract: Against the backdrop of an ongoing debate in most countries about the geographic (mal-)distribution of physician practices, we develop a theoretical and empirical framework to analyze how physician supply at regional level depends on demographic (population size, age struc- ture, fertility and migration) and geographic determinants. Particular attention is given (i) to local population change as a predictor of fu- ture demand for physician services, (ii) to the way in which the age- structure of the (potential patient) population and regional structure interact in shaping the pro…tability of treating the local population, and (iii) to cross-regional correlations in physician supply. Using re- gional data for Germany, we examine econometrically the determinants of regional physician supply. We …nd it to be negatively related to both the population share 60+ and the population share 20- in rural areas. While both population shares tend to have a less negative impact in urban areas, a pronounced positive e¤ect arises only for the share 20- in regions with agglomeration character. Net migration and natural balance turn out to be signi…cant positive as long-run determinants only, indicating thus their role as predictors of future demand. On av- erage, cross-regional spillovers in demand do not seem to be important determinants of regional supply.
    Keywords: age structure, physician supply, regional population ageing, regional migration, overlapping generations, panel data, spatial model
    JEL: I11 J44 J10 R23 C33 C31
    Date: 2009
  4. By: Annabi, Nabil; Fougère, Maxime; Harvey, Simon
    Abstract: The objective of this paper is to examine the inter-industry and labour market occupational effects of population ageing in Canada, using a computable general equilibrium overlapping-generations model. The model is calibrated along a balanced-growth path, taking into account labour-augmenting (Harrod-neutral) technical progress. It also accounts for heterogeneity at the household level, using 25 occupation-specific earnings profiles. In addition to the impact of slower labour force growth, the model captures the shift in sectoral composition of final demand. The latter is due to different consumption preferences of older individuals. Moreover, a wage curve is introduced to explore the impact of population ageing on the unemployment rate. The simulation results indicate that the growth in real GDP per capita could decline by nearly one percentage point between 2006 and 2050. Besides, the production of services, in percent of total GDP, is projected to increase in the long-run, although the analysis shows more modest changes in production shares than in previous studies. The results also suggest that the equilibrium unemployment rate is likely to decline by more than 2 percentage points in the long run. The impact also varies quite significantly at the occupational level.
    Keywords: Population ageing, growth, general equilibrium model, overlapping generations, Canada
    JEL: D58 J11 O40 O51
    Date: 2009–07–22

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