nep-age New Economics Papers
on Economics of Ageing
Issue of 2011‒01‒30
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Disability and social security reforms: The French case By Luc Behaghel; Didier Blanchet; Thierry Debrand; Muriel Roger
  2. Civil Service Pension Arrangements in Japan By Sakamoto, Junichi
  3. Pension Record-keeping Problems in Japan By Takayama, Noriyuki
  4. Pension Systems for Public Sector Employees in the Republic of Korea By Kim, Jae-Kyeong; Moon, Hyung-Pyo
  5. Economic crises, high public pension spending and blame-avoidance strategies: Pension policy retrenchments in 14 social-insurance countries, 1981 - 2005 By Fernandez, Juan J.
  6. Gender differences in the importance of family and social relations for life satisfaction among elderly Japanese By Oshio, Takashi
  7. Nonlinear dynamics in an OLG growth model with young and old age labour supply: the role of public health expenditure By Gori, Luca; Sodini, Mauro
  8. Productivity and age: Evidence from work teams at the assembly line By Börsch-Supan, Axel; Weiss, Matthias
  9. "Life-Cycle Labor Search with Stochastic Match Quality" By Julen Esteban-Pretel; Junichi Fujimoto
  10. Job Search Requirements for Older Unemployed: Transitions to Employment, Early Retirement and Disability Benefits By Bloemen, Hans; Hochguertel, Stefan; Lammers, Marloes
  11. Identifying Trend and Age Effects in Sickness Absence from Individual Data: Some Econometric Problems By Biørn, Erik

  1. By: Luc Behaghel (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Didier Blanchet (INSEE-D3E - Département des études économiques d'ensemble - INSEE); Thierry Debrand (IRDES - Institut de recherche et documentation en économie de la santé - IRDES); Muriel Roger (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, INSEE-D3E - Département des études économiques d'ensemble - INSEE)
    Abstract: The French pattern of early transitions out of employment is basically explained by the low age at “normal” retirement and by the importance of transitions through unemployment insurance and early-retirement schemes before access to normal retirement. These routes have exempted French workers from massively relying on disability motives for early exits, contrarily to the situation that prevails in some other countries where normal ages are high, unemployment benefits low and early-retirement schemes almost non-existent. Yet the role of disability remains interesting to examine in the French case, at least for prospective reasons in a context of decreasing generosity of other programs. The study of the past reforms of the pension system underlines that disability routes have often acted as a substitute to other retirement routes. Changes in the claiming of invalidity benefits seem to match changes in pension schemes or controls more than changes in such health indicators as the mortality rates. However, our results suggest that increases in average health levels over the past two decades have come along with increased disparities. In that context, less generous pensions may induce an increase in the claiming of invalidity benefits partly because of substitution effects, but also because the share of people with poor health increases.
    Keywords: Pensions ; Social Security ; Disability ; Early Retirement ; Unemployment ; Senior
    Date: 2011–01
  2. By: Sakamoto, Junichi
    Date: 2011–01
  3. By: Takayama, Noriyuki
    Date: 2010–12
  4. By: Kim, Jae-Kyeong; Moon, Hyung-Pyo
    Abstract: On December 31, 2009, the Government Employees Pension System (GEPS) in the Republic of Korea was faced with a huge pension reform. The objective of the reform was to lessen the financial burden in the future. This paper tries to provide a comprehensive understanding on the 2009 reform, rationalizing on the resulting effects, its limitation and tasks ahead. Initially, upon the preliminary comments on the structure of public pension system in Korea, the paper presents the history and design features of the pension schemes for public sector employees. Second, it provides detailed aspects of the reform such as key issues, reform process and resulting pension structure. Then, as a primary concern, it examines the effects of the 2009 reform from two different perspectives; financial evaluation in macro perspective and individual equity evaluation in micro perspective. Finally, we will try to evaluate the 2009 reform of the GEPS as a whole, and then to address its limitation and tasks ahead. We show that, while the 2009 reform could consolidate the financial status for the scheme by and large, the GEPS will inevitably face various challenges ahead. The implication is that future path of the reform should be chosen in a fashion that both macro-financial aspect and micro-equity aspect are equally well considered.
    Keywords: Government Employees Pension System (GEPS), Military Pension System (MPS), pension reform, financial status, individual equity
    Date: 2011–01
  5. By: Fernandez, Juan J.
    Abstract: This paper examines the determinants of the timing of public pension policy retrenchments in 14 affluent democracies. Available research does not satisfactorily capture the multidimensionality of these legislative events, because it relies on indicators of pension policy provisions for current pensioners even though recent retrenchment pension reforms have been characterized by phased-in or grandfathering measures. Instead, this paper identifies these events by considering the individual long-term implications of each pension reform passed in 14 OECD social-insurance countries between 1981 and 2005. Based on a synthetic review of the pension policy literature, data from financial projections, and principles from the economics of welfare programs, I identify 62 pension retrenchments passed in these countries. My argument is that macroeconomic conditions, size of public pension system, and stage in the electoral cycle shape the likelihood of pension retrenchments. Results obtained from conditional frailty models for recurrent and sequential events support this argument. The interval between pension retrenchments is shorter in countries with low economic growth and high public pension spending, as well as in countries in a post-election year. -- Dieses Papier betrachtet die zeitlichen Muster von Rentenkürzungen und deren Determinanten in wohlhabenden Demokratien. Die derzeitige Forschung berücksichtigt die Multidimensionalität dieser legislativen Maßnahmen nur unzureichend, da sie sich auf die Indikatoren für die aktuelle Rentnerpopulation konzentriert, obwohl diese in Zusammenhang mit bereits eingeleiteten oder früheren gesetzlichen Maßnahmen stehen. Die vorliegende Studie hingegen bezieht die Langzeitfolgen der Rentenreformen und deren Entwicklung in vierzehn OECD Ländern im Zeitraum von 1981 bis 2005 in die Analyse ein. Auf der Grundlage einer zusammenfassenden Bestandsaufnahme der Literatur zur Rentenpolitik, von Daten aus finanziellen Hochrechnungen sowie der ökonomischen Prinzipien von Wohlfahrtsprogrammen werden in diesen Ländern zunächst insgesamt 62 Rentenkürzungsmaßnahmen identifiziert. Zur Erklärung der zeitlichen Abfolge der Maßnahmen werden die makroökonomischen Bedingungen, die Größe des Rentensystems sowie die Zeitpunkte der Anpassungen im Wahlzyklus herangezogen. Die unter Anwendung konditionaler Frailty-Modelle erzielten Resultate stützen das Argument, dass die häufigsten Rentenkürzungen sich in Ländern im Jahr nach der Wahl sowie in Ländern mit geringem Wirtschaftswachstum und hohen Rentenausgaben finden.
    Date: 2010
  6. By: Oshio, Takashi
    Abstract: Objectives. The purpose of this study is to investigate how the associations of life satisfaction with family and social relations differ between elderly men and women in Japan. Methods. Ordered logit models were estimated to explain life satisfaction with a rich set of explanatory variables, using micro data from 3,063 Japanese elderly adults (1,565 men and 1,498 women) collected from the first-wave sample of the Japanese Study of Aging and Retirement (JSTAR), a survey compatible with the HRS in the United States and SHARE in Europe. Results. This study found that life satisfaction is more closely associated with family and social relations for women than for men, after controlling for socioeconomic, health, and other factors. Women are more sensitive than men to coresidence and contact with family members, especially parents-in-law, as well as to social relations with others in the community, while men are much more depressed than women by divorce or widowhood. Discussion. Observed associations between each factor and life satisfaction are largely consistent with those separately reported by preceding studies. However, this analysis compared the relative importance of each factor and its gender difference, contributing to a more comprehensive understanding of subjective well-being of elderly people.
    Date: 2011–01
  7. By: Gori, Luca; Sodini, Mauro
    Abstract: This paper analyses the dynamics of a two-dimensional overlapping generations model with young and old age labour supply. It is shown that the public provision of health investments, which, in turn, affects the demand for material consumption, may represent a source of local indeterminacy, nonlinear dynamics and multiplicity of equilibria. Furthermore, global indeterminacy may also occur because of the co-existence of two attractors with tangled basins of attraction.
    Keywords: Chaos; Labour supply; OLG model; Public health expenditure
    JEL: C68 O41 I18 J22 C62
    Date: 2011–01–17
  8. By: Börsch-Supan, Axel; Weiss, Matthias (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: This paper studies the relation between workers’ age and their productivity in work teams. We explore a unique data set that combines data on errors occurring in the production process of a large car manufacturer with detailed information on the personal characteristics of workers responsible for the errors. We do not find evidence that productivity declines with age.
    JEL: J24 J14 D24
    Date: 2011–01–19
  9. By: Julen Esteban-Pretel (National Graduate Institute for Policy Studies); Junichi Fujimoto (Faculty of Economics, University of Tokyo)
    Abstract: Unemployment, job nding, and job separation rates exhibit patterns of decline as worker age increases in the U.S. We build and numerically simulate a search and matching model of the labor market that incorporates a life-cycle structure to account for these empirical facts. The model features random match quality, which, with positive probability, is not revealed until production takes place. We show that the model, calibrated to U.S. data, is able to reproduce the empirical patterns of unem- ployment and job transition rates over the entire life-cycle. Both decreasing distance to retirement as a worker ages, and ex ante unknown match quality, are essential in delivering these results. We then explore, both analytically and numerically, the eciency implications of the model.
    Date: 2011–01
  10. By: Bloemen, Hans (VU University Amsterdam); Hochguertel, Stefan (VU University Amsterdam); Lammers, Marloes (VU University Amsterdam)
    Abstract: In this paper, we use a recent policy change in the Netherlands to study how changes in search requirements for the older unemployed affect their transition rates to employment, early retirement and sickness/disability benefits. The reform, becoming effective on January 1st 2004, required the elderly to formally report their job search efforts to the employment office in order to avoid a (temporary) cut in benefits. Before the new law was passed, unemployed were allowed to stop all search activity at the moment they turned 57.5. Estimating various duration models using difference-in-difference and regression discontinuity approaches, we find that for several groups of individuals that were affected by the policy change, the stricter search requirements did significantly increase their entry rate into employment. However, we also find evidence of a higher outflow to sickness/disability insurance schemes, a presumably unwanted side-effect of the policy change.
    Keywords: duration analysis, policy evaluation, search effort, substitution
    JEL: C31 J26 J64 J68
    Date: 2011–01
  11. By: Biørn, Erik (Dept. of Economics, University of Oslo)
    Abstract: When using data from individuals who are in the labour force to disentangle the empirical relevance of cohort, age and time effects for sickness absence, the inference may be biased, affected by sorting-out mechanisms. One reason is unobserved heterogeneity potentially affecting both health status and ability to work, which can bias inference because the individuals entering the data set are conditional on being in the labour force. Can this sample selection be adequately handled by attaching unobserved heterogeneity to non-structured fixed effects? In the paper we examine this issue and discuss the econometric setup for identifying from such data time effects in sickness absence. The inference and interpretation problem is caused, on the one hand, by the occurrence of time, cohort and age effects also in the labour market participation, on the other hand by correlation between unobserved heterogeneity in health status and in ability to work. We show that running panel data regressions, ordinary or logistic, of sickness absence data on certain covariates, when neglecting this sample selection, is likely to obscure the interpretation of the results, except in certain, not particularly realistic, cases. However, the fixed individual effects approach is more robust in this respect than an approach controlling for fixed cohort effects only.
    Keywords: Sickness absence; health-labour interaction; cohort-age-time problem; self-selection; latent heterogeneity; bivariate censoring; truncated binormal distribution; panel data
    JEL: C23 C25 I38 J22
    Date: 2010–12–18

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