nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒09‒26
eight papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Population Aging, Older Workers, and Canada’s Labour Force By Frank T. Denton; Byron G. Spencer
  2. Patterns of Retirement as Reflected in Income Tax Records for Older Workers By Frank T. Denton; Ross Finnie; Byron G. Spencer
  3. International Differences in Longevity and Health and their Economic Consequences By P.-C. Michaud; D. Goldman; D. Lakdawalla; A. Gailey; Y. Zheng
  4. JSTAR First Results 2009 Report By ICHIMURA Hidehiko; SHIMIZUTANI Satoshi; HASHIMOTO Hideki
  5. Inheritances, Health and Death By Beomsoo Kim; Christopher J. Ruhm
  6. Long-term Care Insurance Facilities and Interregional Migration of the Elderly in Japan By Akihiro Kawase; Katsuyoshi Nakazawa
  7. Precautionary and Entrepreneurial Saving: New Evidence from German Households By Frank M. Fossen; Davud Rostam-Afschar
  8. Elderly Migration, State Taxes, and What They Reveal By Onder, Ali Sina; Schlunk, Herwig

  1. By: Frank T. Denton; Byron G. Spencer
    Abstract: The Expert Panel on Older Workers made recommendations designed to increase the labour force participation of older workers. We explore the implications that higher rates of older-worker participation would have for the overall size and age composition of the labour force, for the productive capacity of the economy, and for the incomes of Canadians. Our purpose is to assess the potential impact that increased participation of older workers might have in offsetting any anticipated adverse effects of population aging on standards of living.
    Keywords: older worker, participation rates, productive capacity, population aging
    JEL: J21 J24 J26
    Date: 2009–09
  2. By: Frank T. Denton; Ross Finnie; Byron G. Spencer
    Abstract: If retirement means a substantial and sustained reduction in the time spent working for pay or profit, measurement requires a definition of substantial and sufficient observations of the same individuals to determine whether a transition from “working” to “retired” status has occurred. Using the Statistics Canada Longitudinal Administrative Databank, a 20 percent sample of the individual income tax returns of all tax filers since 1980, we identify those with significant labour force attachment at ages 50-52, and follow them year by year. If retired means having no income from employment, the median age of retirement is about 63 for men, 62 for women. That is true for all cohorts. If earning up to half of one’s previous employment income is deemed consistent with being retired, the median age is about 60 for both men and women. Results obtained in this way are consistent with calculations based on Labour Force Survey data.
    Keywords: retirement, older workers
    JEL: J26 J22
    Date: 2009–09
  3. By: P.-C. Michaud; D. Goldman; D. Lakdawalla; A. Gailey; Y. 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.
    Keywords: disability, mortality, international comparisons, microsimulation
    JEL: I10 I38 J26
    Date: 2009–09
  4. By: ICHIMURA Hidehiko; SHIMIZUTANI Satoshi; HASHIMOTO Hideki
    Abstract: This paper provides an overview of the first wave of the Japanese Study of Ageing and Retirement (hereafter "JSTAR"). Using this rich and unique dataset, we describe in detail how middle-aged and elderly Japanese live in terms of economic, social, health, and family status. In this project, our intention is to zoom in to paint a picture of the lives of individuals and zoom out to also provide a panorama view of society, while extracting scientific findings which we hope are innovative and insightful regarding life in Japan as well as other countries in the world. Moreover, we try to connect these new scientific findings to efforts toward enhancing the effectiveness of policymaking.
    Date: 2009–09
  5. By: Beomsoo Kim; Christopher J. Ruhm
    Abstract: We examine how wealth shocks, in the form of inheritances, affect the mortality rates, health status and health behaviors of older adults, using data from eight waves of the Health and Retirement Survey (HRS). Our main finding is that bequests do not have substantial effects on health, although some improvements in quality-of-life are possible. This absence occurs despite increases in out-of-pocket (OOP) spending on health care and in the utilization of medical services, especially discretionary and non-lifesaving types such as dental care. Nor can we find a convincing indication of changes in lifestyles that offset the benefits of increased medical care. Inheritances are associated with higher alcohol consumption, but with no change in smoking or exercise and a possible decrease in obesity.
    JEL: I12
    Date: 2009–09
  6. By: Akihiro Kawase (Faculty of Economics, Toyo University, 5-28-20 Hakusan, Bunkyo-ku, Tokyo 112-8606, Japan); Katsuyoshi Nakazawa (Faculty of Economics, Toyo University)
    Abstract: Using municipality-level data of Japan, this paper empirically examines how the capacity of long-term care insurance facilities impacts interregional migration of the elderly. We construct net-migration data of the elderly population in each municipality by combining statistics available from existing sources. We find that interregional differences in capacity of long-term care insurance facilities generate strong magnetic effects on migration of the elderly. Our results indicate that family care is difficult and that long-term care insurance facilities are necessary for late-stage elderly in need of long-term care.
    Keywords: Long-term care insurance facility, Interregional migration, Welfare magnet
    JEL: H75
    Date: 2009
  7. By: Frank M. Fossen; Davud Rostam-Afschar
    Abstract: The well-documented positive correlation between income risk and wealth was interpreted as evidence for high amounts of precautionary wealth in various studies. However, the large estimates emerged from pooling non-entrepreneurs and entrepreneurs without controlling for heterogeneity. This paper provides evidence for Germany based on representative panel data including private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but it is shown that this is not due to precautionary motives. Entrepreneurs may rather save for old age, as they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity of entrepreneurial choice.
    Keywords: precautionary saving, precautionary wealth, entrepreneurship
    JEL: D91 D12 E21
    Date: 2009
  8. By: Onder, Ali Sina (Uppsala Center for Fiscal Studies); Schlunk, Herwig (Vanderbilt University Law School)
    Abstract: Empirical results obtained from the 2000 Census elderly migration data using a general gravity model of migration flows confirm earlier findings of the ‘same sign problem’ in the literature, which means that the elderly both migrate from and to states where taxes are higher. The same sign problem is mainly an aggregation problem, and it can be attributed to the heterogeneity in public policies across states that attract the most migrants as well as across states that lose the most migrants. We propose that in a state-level aggregated dataset, it is possible to control for heterogeneity in states’ public policies by controlling for some characteristics of either the origin or the destination state. In a gravity equation estimation for elderly migration, when controlled for heterogeneity, the same sign problem fades away, and the gravity equation shows clearer patterns for elderly migration. In particular, local amenities, tax exemptions, and low inheritance taxes are shown to be significant variables in attracting the elderly into a state.
    Keywords: Tiebout Hypothesis; Migration; Taxation; State Taxes; Amenities
    JEL: H24 H25 H31
    Date: 2009–09–18

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