nep-age New Economics Papers
on Economics of Ageing
Issue of 2012‒04‒23
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Do up-front tax incentives affect private pension saving in the United Kingdom? By Rowena Crawford; Richard Disney; Carl Emmerson
  2. Estimating the eect of retirement on mental health via panel discontinuity designs By Fe, Eduardo; Hollingsworth, Bruce
  3. Ageing and Skills: A Review and Analysis of Skill Gain and Skill Loss Over the Lifespan and Over Time By Desjardins, Richard; Warnke, Arne Jonas
  4. Innovative Approaches to Managing Longevity Risk in Asia: Lessons from the West By Roy, Amlan
  6. Education, Health and Mortality: Evidence from a Social Experiment By Meghir, Costas; Palme, Mårten; Simeonova, Emilia

  1. By: Rowena Crawford (Institute for Fiscal Studies); Richard Disney (Institute for Fiscal Studies and University of Nottingham); Carl Emmerson (Institute for Fiscal Studies)
    Abstract: The paper examines how individuals respond to complex decision-making environments – in particular, whether up-front financial incentives are an effective policy lever to change behaviour. The paper argues that incentives differ in their transparency and in their complexity; individuals are more likely to respond to incentives that are both transparent and imply a large pay-off in terms of net income. The paper focuses on household ‘tax planning’ in the context of tax reliefs for retirement saving in the United Kingdom. It examines whether take-up of retirement saving instruments increases at the higher rate threshold for income tax, since tax relief is given at the marginal tax rate and should be more attractive to those just above this threshold than to those just below it. It then examines a more complex case where the tax system provides an incentive for pension saving to do be done by one member of a couple. Econometric results are obtained from the Family Resources Survey on these two tests of household responses to complex incentives.
    Date: 2012–03
  2. By: Fe, Eduardo; Hollingsworth, Bruce
    Abstract: This article explores the potential effects of retirement on mental health and health care utilisation isolating sources of potential heterogeneity in treatment effect. To estimate the effects of retirement, we devise a new identifying strategy that combines kink and regression discontinuity designs with panel data methods. Our method is then applied to the British Household Panel Survey, a rich representative longitudinal survey. It is found that retirement has a small impact on primary care use, but overall has little effect on mental health.
    Keywords: Discontinuity design; weak identification; retirement; health; kink regression; regression discontinuity
    JEL: I18 C90 C30 J26 C21
    Date: 2012–03–02
  3. By: Desjardins, Richard; Warnke, Arne Jonas
    Abstract: The relationship between ageing and skills is becoming an important policy issue, not least in the context of population ageing. Data from the Programme for the International Assessment of Adult Competencies (PIAAC) will potentially add considerably to the understanding of the relationship between ageing and foundation skills. In particular, the fact that data from the 1994-1998 International Adult Literacy Survey (IALS) and the 2003-2007 Adult Literacy and Lifeskills Survey (ALL) will be linked with PIAAC offers a unique opportunity to examine trends over time at the cohort level for a wide range of countries. Specifically, repeated measures will enable an analysis of whether there is skill gain and skill loss over the lifespan of cohorts and overtime between cohorts. This is especially important because age-skill profiles observed on the basis of a single cross-section are difficult to interpret. With this as a backdrop, this paper has sought to provide an overview of what is known about age-skill profiles and to conduct an analysis that demonstrates how trend data based on repeated cross-sectional observations of direct measures of skill at the cohort level can be used to estimate skill gain and skill loss over the lifespan and over time. --
    Keywords: Ageing,Cognitive Skills,PIAAC,IALS,Adult Literacy,Aging,ALL,Skills,Education
    JEL: J24 J14 D91 J00 I19 I29
    Date: 2012–03–22
  4. By: Roy, Amlan (Asian Development Bank Institute)
    Abstract: This paper discusses what is longevity risk, why it is important, approaches used by the West to manage longevity risk, and what lessons can be learnt by Asian countries from the experiences of the West. Increasing and uncertain longevity has emerged as a key risk affecting individuals, pension plans, insurers, and governments in both the developed and emerging world. I discuss progress in the field of longevity modeling and the merits as well as drawbacks of these models. In western countries, attempts have been made by capital market and governments to deal with longevity risk, but the availability of solutions remain limited.
    Keywords: longevity risk; asia; managing longevity risk; longevity modeling; pension plans
    JEL: H55 I38 J14 J32 O17
    Date: 2012–04–13
  5. By: Mertens, Jean-Francois (CORE, Universite Catholique de Louvain); Rubinchik, Anna (Department of Economics, University of Haifa)
    Abstract: For an overlapping generations economy with varying life-cycle productivity, non-stationary endowments, continuous time starting at infinity (hence allowing for full anticipation), constant-returns-to-scale production and ces utility we fully characterise equilibria where output is higher than investment, which is strictly positive. Net assets (aggregate savings minus the value of the capital stock) are constant in any equilibrium, and, for balanced growth equilibria (BGE, defined for an economy with stationary endowments), net assets are non-zero only in the golden rule equilibrium, in accord with Gale 1973. The number of BGE is finite. Their parity, however, depends on the life-cycle productivity, in particular, on the relation between the intertemporal elasticity of substitution, the minimal working age and the minimal tax age.
    Keywords: Infinite Economies, Overlapping Generations, Exogenous Growth
    JEL: D50
    Date: 2012–03–05
  6. By: Meghir, Costas (Yale University); Palme, Mårten (Stockholm University); Simeonova, Emilia (Tufts University)
    Abstract: We study the effect of a compulsory education reform in Sweden on adult health and mortality. The reform was implemented by municipalities between 1949 and 1962 as a social experiment and implied an extension of compulsory schooling from 7 or 8 years depending on municipality to 9 years nationally. We use detailed individual data on education, hospitalizations, labor force participation and mortality for Swedes born between 1946 and 1957. Individual level data allow us to study the effect of the education reform on three main groups of outcomes: (i) mortality until age 60 for different causes of death; (ii) hospitalization by cause and (iii) exit from the labor force primarily through the disability insurance program. The results show reduced male mortality up to age fifty for those assigned to the reform, but these gains were erased by increased mortality later on. We find similar patterns in the probability of being hospitalized and the average costs of inpatient care. Men who acquired more education due to the reform are less likely to retire early.
    Keywords: causal effects of education, compulsory schooling laws, comprehensive school reforms, education reform, returns to schooling
    JEL: I12 I18 I21
    Date: 2012–04

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