nep-age New Economics Papers
on Economics of Ageing
Issue of 2010‒07‒03
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Role of Re-entry in the Retirement Process By Michael D. Giandrea; Kevin E. Cahill; Joseph F. Quinn
  2. The Chinese pension system - First results on assessing the reform options By Heikki Oksanen
  3. Agglomeration processes in ageing societies By Theresa Grafeneder-Weissteiner; Klaus Prettner
  4. Don't raise the retirement age! An experiment on opposition to pension reforms and East-West differences in Germany By Beatice Scheubel; Daniel Schunk; Joachim Winter
  5. Demographic Change, Human Capital and Welfare By Alexander Ludwig; Thomas Schelkle; Edgar Vogel
  6. Scandinavian long-term care financing By Karlsson, Martin; Iversen, Tor; Øien, Henning
  7. Impacto da Alfabetização de Adultos sobre Salário e Emprego By Soares De Baldini Rocha, Maúna; Ponczek, Vladimir

  1. By: Michael D. Giandrea (U.S. Bureau of Labor Statistics); Kevin E. Cahill (Analysis Group, Inc.); Joseph F. Quinn (Boston College)
    Abstract: To what extent do older Americans re-enter the labor force after an initial exit and what drives these “unretirement” decisions? Retirement for most older Americans with full-time career jobs is not a one-time, permanent event. Labor force exit is more likely to be a process. Prior studies have found that between one half and two thirds of career workers take at least one other job before exiting from the labor force completely. The transitional nature of retirement may be even more pronounced when considering the impact of re-entry. This paper examines the extent to which older Americans with career jobs re-entered the labor force. The analysis is based on data from the Health and Retirement Study (HRS), an ongoing, longitudinal survey of older Americans that began in 1992. We examined the retirement patterns of a subset of 5,617 HRS respondents who were on a full-time career job at the time of the first interview. Logistic regression was used to explore determinants of re-entry among those who initially exited the labor force. We found that approximately 15 percent of older Americans with career jobs returned to the labor force after initially exiting. Respondents were more likely to re-enter if they were younger, were in better health, or had a defined-contribution pension plan. This research provides empirical evidence of how older Americans are utilizing bridge jobs as they transition from career employment, and that re-entry may be an important part of the work experience of older Americans.
    Keywords: Economics of Aging, Partial Retirement, Bridge Jobs, Gradual Retirement
    JEL: J26 J14 J32 H55
    Date: 2010–06
  2. By: Heikki Oksanen
    Abstract: The aim of this paper is to analyse options for reforming the fragmented Chinese pension system that covers only 55 % of urban employees and a very small part of the rural population. After a brief history of pensions in China we present recent reform proposals and then discuss principles of pension reforms, with particular attention to reducing the pension contribution rates so that compliance could improve and coverage increase. As the Chinese population is ageing fast, we are presenting transition to a notional defined contribution (NDC) system as a model for adjusting the pension rules for increasing longevity. Transforming the accrued pension rights into NDC accounts and starting to apply the new NDC-inspired rules on indexation is not necessarily a jump into the unknown for the Chinese pensions system. Rather, it could be a useful and long-awaited clarification to the rules and a way to move towards a more uniform system nationwide. With the help of a simulation model based on Chinese data we produce scenarios for a range of pension reforms and assess their properties.
    Keywords: Oksanen,China, population ageing, pension reforms, notional defined contribution scheme,NDC
    JEL: H11 H55
    Date: 2010–06
  3. By: Theresa Grafeneder-Weissteiner; Klaus Prettner
    Abstract: This article investigates agglomeration processes in ageing societies by introducing an overlapping generation structure into a New Economic Geography model. Whether higher economic integration leads to spatial concentration of economic activity crucially hinges on the economies' demographic properties. While population aging as represented by declining birth rates strengthens agglomeration processes, declining mortality rates weaken them. This is due to the fact that we allow for nonconstant population size. In particular, we show that population growth acts as an important dispersion force that augments the distributional effects on agglomeration processes resulting from the turnover of generations.
    Keywords: Agglomeration; Population Aging; Population
    Date: 2010–06
  4. By: Beatice Scheubel; Daniel Schunk; Joachim Winter (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: For policy reforms to increase a society's welfare, reliable information on people's prefer- ences and expectations is crucial. Representative opinion polls, often involving simpli¯ed questions about the complex topics under debate, are an important source of information for both policy-makers and the public. Do people's answers to these poll questions reliably re°ect their preferences and expec- tations, or does fundamental, undiscriminating opposition to reforms distort them? We address this question in the context of a recent German pension reform which raised the statutory retirement age by two years to age 67. By introducing an experiment into a representative household survey, we are able to disentangle expectations of work ability at retirement and fundamental opposition. Our results show that expected work ability declines substantially with increasing target age (63, 65, or 67 years). Answers from West German respondents re°ect their current life situation as well as individual health and other risk factors. However, a fundamental opposition to reforms of the welfare state appears to strongly affect responses from East German households.
    JEL: J10 H30 H55 D84
    Date: 2009–09–01
  5. By: Alexander Ludwig; Thomas Schelkle; Edgar Vogel (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: This paper employs a large scale overlapping generations (OLG) model with endogenous human capital formation using a Ben-Porath (1967) technology to evaluate the quantitative role of human capital adjustments for the economic consequences of demographic change. We find that endogenous human capital formation is a quantitatively important adjustment mechanism which substantially mitigates the macroeconomic impact of population aging. On the aggregate level, the predicted decrease of the rate of return to physical capital is only one third of the predicted decrease in a standard model with a fixed human capital profile. In terms of welfare, while young agents with little assets gain up to 0.8% in consumption from increasing wages in both models, welfare losses from decreasing returns of older and asset rich households are substantial. But importantly, these losses are about 50 − 70% higher in the model without endogenous human capital formation. Ignoring this adjustment channel thus leads to quantitatively important biases of the welfare assessment of demographic change. We also document that not reforming the social security system but letting contribution rates increase will largely offset any positive welfare effects for future generations.
    JEL: C68 E17 E25 J11 J24
    Date: 2010–01–15
  6. By: Karlsson, Martin (Technische Universität Darmstadt); Iversen, Tor (Institute of Health Management and Health Economics); Øien, Henning (Institute of Health Management and Health Economics)
    Abstract: In this paper, we compare and analyse the systems for financing long-term care for older people in the Scandinavian countries – Denmark, Norway and Sweden. The three countries share common political traditions of local autonomy and universalism, and these common roots are very apparent when the financing of long-term care is concerned. Nevertheless, the Scandinavian systems for long- term care (LTC) exhibit some important deviations from the idealized “universal welfare state” to which these countries are normally ascribed. For example, user charges tend to be strongly dependent on earnings, which is incoherent with the general norm of flat-rate public services. Also, there is significant regional variation in the level of services provided, which is in direct contrast with the universalist ambitions. Overall, the Scandinavian countries distinguish themselves through their very high reliance on public spending in long-term care. It is unclear to what extent the Scandinavian model for financing of long term care will be sustainable as demographic change progresses in the next few decades.
    Keywords: long term care; financing; welfare state; Scandinavia
    JEL: H42 H51 I11 I18 J14
    Date: 2010–06–22
  7. By: Soares De Baldini Rocha, Maúna; Ponczek, Vladimir
    Abstract: In this paper, we document some evidence about the impacts of adult alphabetization on earningsand labor force participation. The longitudinal data available in the Monthly Employment Survey(PME) allow us to control for unobservable fixed effects, which generate more consistent androbust estimators. On average, our results indicate an increase of 9.3% in the worker’s hourly wageafter getting alphabetized. Our results also suggest that the effects on wage are due to productivitygains and not caused by an increase of the workers’ formalization. Moreover, we observe that thewage gains are more notorious on certain groups of individuals: women, people living in Salvadorand people aged between 45 and 60 years old.
    Date: 2010–06–17

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