nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒11‒21
five papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. A New Anatomy of the Retirement Process in Japan By Shimizutani, Satoshi
  2. Intergenerational aspects of health care By Louise Sheiner
  3. Pension funds’ asset allocation and participant age: a test of the life-cycle model By Jacob A. Bikker; Dirk W.G.A. Broeders; David A. Hollanders; Eduard H.M. Ponds
  4. Why Are Middle-Aged People so Depressed?: Evidence from West Germany By Hilke Brockmann
  5. Sustainability of social security in a model of endogenous fertility By Oshio, Takashi; Yasuoka, Masaya

  1. By: Shimizutani, Satoshi
    Abstract: In Japan, retirement is a gradual process that transpires over a particularly long period of time. Using large scale micro-level datasets from the Survey of Employment of the Elderly compiled by the Japanese government, we provide some stylized facts on the development of retirement behavior since the 1980s and explore factors affecting the individual retirement decision. First, we observed a general declining trend in the proportion of retired individuals aged 55-59 (especially females) while the proportion of retired individuals aged 65-69 (especially males) increased. Second, the survival analysis on actual retirement age shows that males who worked as an expert/technician or manager before retirement or individuals receiving a larger public pension income are likely to retire earlier. Third, another survival analysis on expected retirement age shows that workers with lower job satisfaction in terms of rewards and males with a larger family size are more likely to retire earlier.
    Keywords: retirement, labor supply of the elderly, survival analysis, Japan
    JEL: J14 J26
    Date: 2009–10
  2. By: Louise Sheiner
    Abstract: The physical process of aging means that the use of health services varies significantly by age. This association between age and health care consumption raises a number of issues related to intergenerational and intragenerational equity, including the allocation of societal resources across age groups and the effects of population aging and health cost growth on public sector health care burdens and, hence, on intergenerational redistribution. This working paper (forthcoming as a chapter in the Oxford Handbook of Health Economics) provides a detailed look at the theoretical and empirical relationships between health spending and age, both in the US and internationally, and reviews the evidence on the intergenerational redistribution associated with public health spending over time.
    Date: 2009
  3. By: Jacob A. Bikker; Dirk W.G.A. Broeders; David A. Hollanders; Eduard H.M. Ponds
    Abstract: This paper examines the impact of participants' age distribution on the asset allocation of Dutch pension funds, using a unique data set of pension fund investment plans for 2007. Theory predicts a negative effect of age on (strategic) equity exposures. We observe that pension funds do indeed take the average age of their participants into account. However, the average age of active participants has been incorporated much more strongly in investment behaviour than the average ages of retired or dormant participants. This suggests that both employers and employees, who dominate pension fund boards, tend to show more interest in active participants. A one-year higher average age in active participants leads to a significant and robust reduction in the strategic equity exposure by around 0.5 percentage point. Larger pension funds show a stronger age-equity exposure effect than smaller pension funds. This age-dependent asset allocation of pension funds aligns with the original life-cycle model by which young workers should invest more in equity than older workers because of their larger human capital. Other factors, viz. fund size, funding ratio, and average pension wealth of participants, influence equity exposure positively and significantly, in line with theory. Pension plan type and pension fund type have no significant impact.
    Keywords: Pension funds; strategic equity allocation; lifecycle saving and investing.
    JEL: D40 L11
    Date: 2009–10
  4. By: Hilke Brockmann
    Abstract: Does happiness vary with age? The evidence is inconclusive. Some studies show happiness to increase with age (Diener et al. 1999; Argyle 2001). Others hold that the association is U-shaped with either highest depression rates (Mroczek and Christian, 1998; Blanchflower and Oswald, 2008) or highest happiness levels occurring during middle age (Easterlin, 2006). Current studies suffer from two shortcomings. Firstly, they do not control for three confounding time variables: age, period and cohort effects. Secondly, all empirical research lacks a theoretical explanation as to why age affects happiness. The purpose of our analysis is to contribute to closing both of these research gaps. A social investment model frames the dynamics of happiness across the life-span. The empirical test draws on West German panel data that followed individuals from 1984 to 2005. Descriptive analysis shows a cubic age function with the lowest level at middle age. However, hierarchical three-level variance component models (Rabe-Hesketh and Skrondal, 2005), find significant differences across pre-war and post-war cohorts, baby boomers and offspring of the baby bust as well as deviations during reunification. Yet, cohort and period effects account for less than 10% of the variance. (Un)happiness in midlife is more strongly determined by gender-specific occasional influences and individual characteristics. Both define objective and subjective returns of professional and personal life investments. These social investment decisions date back to early adulthood and bear a high risk of failure during midlife. Unforeseen consequences and long-term private and professional commitments make it costly to adjust, but at the same time new investments may pay off in a pro-longed future. This dilemma turns many middle-aged people into ¿frustrated achievers¿.
    Keywords: Happiness, subjective well-being, gendered life-course, inequality, APC effects (Age-Period-Cohort effects), multi-level analysis, Germany
    Date: 2009
  5. By: Oshio, Takashi; Yasuoka, Masaya
    Abstract: Social security tends to be unsustainable in nature in that it reduces individuals' demand for children as a measure to support their old age, which in turn undermines the financial base of social security. Using a simple overlapping-generations model with endogenous fertility and income transfer from children to parents, we discuss the maximum size of a pay-as-you-go social security program that can prevent a cumulative reduction of fertility and make the program sustainable. We also show that childcare allowance raises the maximum size of the program and raises an individual's lifetime utility.
    Keywords: social security, fertility, intergenerational income transfer
    JEL: H31 H55
    Date: 2009–08

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