nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒08‒16
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Provisions for old age. Income provisions and retirement By Tatjana Mika; Uwe Rehfeld; Michael Stegmann
  2. Aging nations and the future of cities By Carl Gaigné; François Thisse
  3. Intergenerational Relationships By Bernhard Nauck; Anja Steinbach
  4. Provision for Old Age. National and International Survey Data to Support Research and Policy on Aging By Hendrik Jürges
  5. Projecting Pension Expenditures in Spain: On Uncertainty, Communication and Transparency By Rafael Doménech; Angel Melguizo
  6. Voluntary pension savings: the effects of the Finnish tax reform on savers' behaviour By Jarkko Harju
  7. International Differences in Longevity and Health and their Economic Consequences By Pierre-Carl Michaud; Dana Goldman; Darius Lakdawalla; Adam Gailey; Yuhui Zheng
  8. Estimating Causal Effects of Early Occupational Choice on Later Health: Evidence Using the PSID By Jason M. Fletcher; Jody L. Sindelar
  9. Understanding the Economic Consequences of Shifting Trends in Population Health By Pierre-Carl Michaud; Dana Goldman; Darius Lakdawalla; Yuhui Zheng; Adam Gailey
  10. Pension reform and fiscal policy: some lessons from Chile By Angel Melguizo; Angel Muñoz; David Tuesta; Joaquín Vial

  1. By: Tatjana Mika; Uwe Rehfeld; Michael Stegmann
    Abstract: Research on the income situation of today’s and future retirees requires often record based data. Because of their accuracy in the life-course infomation they can also, if they are linked to survey data, make interviews shorter and less demanding for the interviewed persons. Process produced data from the pension fund are already available for these research topics. The data include details about the employment career and other life-course events as far as they are considered in the pensions’ calculation. Nevertheless, additional sources are needed if research projects address the income situation more in detail, in particular the question of poverty or high income in old age. The pension reforms of the past decade have strengthened the second and third pillar in the importance, thereby increasing their importance of occupational pensions and private savings for future old age income. There exist already some detailed and inclusive data for research on old age income and retirement collected for government reports, but not all this data is yet available for scientific research. Furthermore should the exchange of data between social securitiy and/or tax institutions more often be combined with the collection of statistical data in order to improve the possibility of record-to-record linkage.
    Keywords: Retirement, old age provisions, public pension fund, process produced data, data linkage
    Date: 2009
  2. By: Carl Gaigné; François Thisse
    Abstract: We investigate whether an aging population may challenge the supremacy of large working-cities. To this end, we develop an economic geography model with two types of individuals (the elderly and workers) and two sectors (consumer services and manufacturing). Individuals are geographically mobile and their agglomeration within a city generates rising urban costs through competition for land. When the elderly are immobile and equally distributed between cities, an aging population works against the agglomeration of production. When the elderly are free to choose their residence, the most likely scenario is such that the city with the lower share of old people follows a U-shaped curve. Increasing commuting costs cut short the first phase in which the employment share decreases
    Keywords: economic geography, aging population, spatial mobility, sectoral mobility, commuting costs
    JEL: F12 F16 J60 L13 R12
    Date: 2009
  3. By: Bernhard Nauck; Anja Steinbach
    Abstract: Intergenerational relationships within family and kinship have become a salient issue in scientific research. Major reasons were intense demographic changes in the 20th century, such as the increased life expectancy in combination with decreased fertility, and its implications for major institutions of the social welfare state. This has resulted in the realization of several larger studies, which may serve for the analysis of the situation of old aged people, such as the German Socio-economic Panel, the Generations and Gender Survey, the Family Survey, the German Aging Survey, the Survey on Health, Ageing and Retirement in Europe, and the Panel Analysis of Intimate Relationships and Family Dynamics. However, an overarching theoretical and research perspective on intergenerational relationships from their creation (fertility) over parenting to the most long-lasting relationship between adults of different generations is still missing. In order to overcome this deficiency, the paper recommends for future data structures to obtain information on intergenerational relationships (1) simultaneously and complete, (2) in a life-span perspective, (3) from a panel design, and (4) a multi-actor design. Studies should (5) account for cultural variability of intergenerational relationships and (6) for institutional settings in cross-national comparisons.
    Keywords: Intergenerational Relationships, Intergenerational Solidarity, Life Course, Demographic Change, Ageing, Panel Studies
    Date: 2009
  4. By: Hendrik Jürges
    Abstract: This report reviews recent trends in the collection of multidisciplinary and longitudinal data in the area of aging research, both in Germany and internationally. It also discusses important developments such as linkage with administrative records, the inclusion of health measurements and biomarkers, and the inclusion of populations in institutions, particularly nursing homes.
    Date: 2009
  5. By: Rafael Doménech; Angel Melguizo
    Abstract: In this paper we suggest a set of indicators about the future performance of the Spanish public pension system and a suitable method of representing their uncertainty, in order to improve the communication to the public opinion about its main future challenges. Spain seems a particularly interesting case in Europe to illustrate our proposals, since the social security system has been in surplus for nine consecutive years, in sharp contrast to the projections made just a decade ago, but, at the same time, most projections foresee for Spain one of the highest increases in public expenditure among EU countries due to ageing. We argue that simple, transparent, credible, public and periodic indicators, which take explicitly into account the uncertainty about future demographic, economic and institutional developments, may contribute to improve the debate on the policies needed to strengthen the pension system.
    Keywords: Pensions, projections, communication, uncertainty.
    JEL: E17 H55
    Date: 2009–06
  6. By: Jarkko Harju
    Abstract: Many countries tax voluntary pension savings using the so-called EET model, based on tax-deductible savings and taxable withdrawals. In Finland the tax reform of 2005 changed the tax rate schedule from progressive to proportional, while the basic structure of the EET model was retained. This paper is an empirical study of changes in savers? behaviour as a result of the reform using individual level data. The econometric estimations indicate that the reform altered pension saving behaviour by reducing the labour income and age effects on saving contributions in a statistically significant way. Also, the reform reduced the number of pension savers among high income-earners.
    Keywords: Voluntary pension savings, tax reform, tax incentives
    Date: 2009–06–17
  7. By: Pierre-Carl Michaud; Dana Goldman; Darius Lakdawalla; Adam Gailey; Yuhui Zheng
    Abstract: In 1975, 50 year-old Americans could expect to live slightly longer than their European counterparts. By 2005, American life expectancy at that age has diverged substantially compared to Europe. We find that this growing longevity gap is primarily the symptom of real declines in the health of near-elderly Americans, relative to their European peers. In particular, we use a microsimulation approach to project what US longevity would look like, if US health trends approximated those in Europe. We find that differences in health can explain most of the growing gap in remaining life expectancy. In addition, we quantify the public finance consequences of this deterioration in health. The model predicts that gradually moving American cohorts to the health status enjoyed by Europeans could save up to $1.1 trillion in discounted total health expenditures from 2004 to 2050.
    JEL: I10 I38 J26
    Date: 2009–08
  8. By: Jason M. Fletcher; Jody L. Sindelar
    Abstract: In this paper, we provide some of the first empirical evidence of whether early occupational choices are associated with lasting effects on health status, affecting individuals as they age. We take advantage of data on occupational histories available in the Panel Study of Income Dynamics (PSID) to examine this issue. To the PSID data, we merge historical Census data that reflect the labor market conditions when each individual in the PSID made his first occupational choice. These data on labor market conditions (e.g. state-level share of blue collar workers) allow us to instrument for occupational choice in order to alleviate endogeneity bias. We use parental occupation as additional instruments. Since our instruments may have indirect effects on later health, we also control for respondent’s pre-labor market health, education and several family and state background characteristics in order to make the instruments more plausibly excludable. We find substantial evidence that a blue collar occupation at labor force entry is associated with decrements to later health status, ceteris paribus. These health effects are larger after controlling for endogeneity and are similar across sets of instruments. We also find differences in the effects of occupation by gender, race, and age.
    JEL: I1 I10
    Date: 2009–08
  9. By: Pierre-Carl Michaud; Dana Goldman; Darius Lakdawalla; Yuhui Zheng; Adam Gailey
    Abstract: The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy - with a concomitant decrease in the public-sector’s annuity burden - but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare.
    JEL: I10 I38 J26
    Date: 2009–08
  10. By: Angel Melguizo; Angel Muñoz; David Tuesta; Joaquín Vial
    Abstract: In this paper we analyze the short and medium term fiscal costs stemming from structural pension reform, taking Chile as workhorse. The Chilean pension system, based on individual capital accounts managed by the private sector, has been in operation for almost 30 years, providing a rich evidence of the impact of pension systems on public accounts. Besides, a recent reform that crucially changes the solidarity pillar is being implemented now. In the paper we argue that although much lower than its benefits, fiscal transition costs tend to be high and persistent, so a fiscal consolidation prior to the reform is advisable. This also allows filling the coverage holes that labour market informality generates, as illustrated for Chile, Colombia, Mexico and Peru. Finally, in more general terms, the exportability of this type of pension reform depends not only on its specific design, but on the quality of market and public institutions.
    Keywords: Pension reform, implicit debt, fiscal costs, solidarity pillar, minimum pension, Chile
    JEL: E62 H55 H68
    Date: 2009–07

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