nep-age New Economics Papers
on Economics of Ageing
Issue of 2012‒09‒16
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pension Payments and Receipts by New Zealand Birth Cohorts, 1916–1986 By Andrew Coleman
  2. Reforming the Public Pension System in the Russian Federation By Mauricio Soto; Frank Eich; Charleen Gust
  3. Recessions, Older Workers, and Longevity: How Long Are Recessions Good For Your Health? By Courtney C. Coile; Phillip B. Levine; Robin McKnight
  4. Coordinating Healthcare and Pension Policies : An Exploratory Study By Azad Singh Bali; Mukul G. Asher
  5. Private versus public old-age security By Barnett, Richard C.; Bhattacharya, Joydeep; Puhakka, Mikko
  6. Care regimes on the move: Comparing home care for dependent older people in Belgium, England, Germany and Italy. By Degavre, Florence
  7. Heterogeneity in the Relationship between Happiness and Age: Evidence from the German Socio-Economic Panel By Gregori Baetschmann
  8. Training Participation of a Firm's Aging Workforce By Christian Pfeifer; Simon Janssen; Philip Yang; Uschi Backes-Gellner
  9. Heterogeneity in expected longevities By Josep Pijoan-Mas; Jose-Victor Rios-Rull
  10. Age Effects in the Okun's Law within the Eurozone By Oliver Hutengs; Georg Stadtmann
  11. Public Procurement and Non-contractible Quality: Evidence from Elderly Care By Bergman, Mats A.; Lundberg, Sofia; Spagnolo, Giancarlo

  1. By: Andrew Coleman (Motu Economic and Public Policy Research and the New Zealand Treasury)
    Abstract: This paper analyses how much different cohorts can expect to contribute into the PAYGO-funded New Zealand Superannuation scheme, and contrasts it with the amount each cohort can be expected to obtain in benefits if the current scheme is continued. The analysis is based on historic census and contributions data and SNZ projections of future population trends. The results show that cohorts born prior to 1980 can expect to pay half as much as they can expect to get in retirement benefits, because of the small number of pension recipients when they made the bulk of their payments.
    Keywords: retirement incomes, intergenerational transfers, government pension schemes
    JEL: E24 H55
    Date: 2012–09
  2. By: Mauricio Soto; Frank Eich; Charleen Gust
    Abstract: Pension reform is a key policy challenge in Russia. This paper examines how pension spending could increase in Russia in the absence of reforms, quantifies the impact of some recent proposals, and suggests some alternatives that would ensure public pension benefits - relative to wages - not fall from current levels while containing spending.
    Keywords: Aging , Pension reforms , Pensions , Population , Russian Federation ,
    Date: 2012–08–10
  3. By: Courtney C. Coile; Phillip B. Levine; Robin McKnight
    Abstract: This paper examines the impact of exposure to higher unemployment rates in the pre-retirement years on subsequent mortality. Although past research has found that recessions reduce contemporaneous mortality, these short-term effects may reverse over time, particularly for older workers. If workers experience an economic downturn in their late 50s, they may face several years of reduced employment and earnings before “retiring” when they reach Social Security eligibility at age 62. They also may experience lost health insurance, and therefore higher financial barriers to health care, through age 65, when Medicare becomes available. All of these experiences could contribute to weaker long-term health outcomes. To examine these hypotheses, we use Vital Statistics mortality data between 1969 and 2008 to generate age-specific cohort survival probabilities at older ages. We then link these survival probabilities to labor market conditions at earlier ages. We also use data from the 1980-2010 March Current Population Surveys and the 1991-2010 Behavioral Risk Factor Surveillance System surveys to explore potential mechanisms for this health effect. Our results indicate that experiencing a recession in one’s late 50s leads to a reduction in longevity. We also find that this exposure leads to several years of reduced employment, health insurance coverage, and health care utilization which may contribute to the lower long-term likelihood of survival.
    JEL: I18 J26
    Date: 2012–09
  4. By: Azad Singh Bali (Asian Development Bank Institute (ADBI)); Mukul G. Asher
    Abstract: Rapid ageing of the population globally represents an unprecedented historical trend. As pension and healthcare costs are positively correlated with rising incomes, ageing, urbanization, and a shift from communicable to life-style diseases, managing these costs is a major challenge. There are many linkages between healthcare and pension arrangements—in terms of costs, exposure to risks, and as they jointly impact on crucial policy decisions. This paper discusses the rationale for coordination between various programs to better manage the cost of ageing. The current difficult macroeconomic environment, including fiscal stringency conditions, strengthens the case for such coordination.
    Keywords: Pension, health care, coordination of healthcare and pension programs
    JEL: J1 J4
    Date: 2012–08
  5. By: Barnett, Richard C.; Bhattacharya, Joydeep; Puhakka, Mikko
    Abstract: We compare two institutions head on, a family compact – a parent makes a transfer to her parent in anticipation of a possible future gift from her children – with a pay-as-you-go, social security system in a lifecycle model with endogenous fertility wherein children are valued both as consumption and investment goods. Our focus is strictly on the pension dimension of these competing institutions. We show that an optimally-chosen family compact and a social security system cannot co-exist; indeed, the former may be preferred. A strong-enough negative shock to middle-age incomes destroys family compacts. While such a setting might appear ideal for the introduction of a social security system – as the experience of Europe, circa 1880s, would suggest – this turns out not to be the case: if incomes are too depressed to allow family compacts to flourish, they are also too low to permit introduction of an optimal social security system.
    Keywords: Fertility; social security; pensions; family compacts; intergenerational cooperation; self-enforcing constitutions
    JEL: E21 E32
    Date: 2012–09–04
  6. By: Degavre, Florence
    Date: 2012
  7. By: Gregori Baetschmann
    Abstract: This paper studies the evolution of life satisfaction over the life course in Germany. It clarifies the causal interpretation of the econometric model by discussing the choice of control variables and the underidentification between age, cohort and time effects. The empirical part analyzes the distribution of life satisfaction over the life course at the aggregated, subgroup and individual level. To the findings: On average, life satisfaction is mildly decreasing up to age fifty-five followed by a hump shape with a maximum at seventy. The analysis at the lower levels suggests that people differ in their life satisfaction trends, whereas the hump shape after age fity-five is robust. No important differences between men and women are found. In contrast, education groups differ in their trends: highly educated people become happier over the life cycle, where life satisfaction decreases for less educated people.
    Keywords: Aging, life satisfaction, well-being, happiness methodology
    JEL: C23 I31 D91
    Date: 2012
  8. By: Christian Pfeifer (Institute of Economics, Leuphana University Lüneburg and IZA Bonn, Germany); Simon Janssen (Department of Business Administration, University of Zurich); Philip Yang (Leibniz University Hannover, Institute of Labor Economics); Uschi Backes-Gellner (Department of Business Administration, University of Zurich)
    Abstract: We use a long panel data set for four cohorts of male blue-collar workers entering into an internal labor market to analyze the effect of age on the probability of participating in different employer-financed training measures. We find that training participation probabilities are inverted u-shaped with age and that longer training measures are undertaken earlier in life and working career. These findings are consistent with predictions from a human capital model that incorporates amortization period and screening effects.
    Keywords: Age; Human capital; Internal labor markets; Training
    JEL: J14 J24 M53
    Date: 2012–08
  9. By: Josep Pijoan-Mas; Jose-Victor Rios-Rull
    Abstract: We develop a new methodology to compute differences in the expected longevity of individuals who are in different socioeconomic groups at age 50. We deal with two main problems associated with the standard use of life expectancy: that people’s socioeconomic characteristics evolve over time and that there is a time trend that reduces mortality over time. Using HRS data for individuals from different cohorts, we estimate a hazard model for survival with time-varying stochastic endogenous covariates that yields the desired expected durations. We uncover an enormous amount of heterogeneity in expected longevities between individuals in different socioeconomic groups, albeit less than implied by a naive (static) use of socioeconomic characteristics. Our analysis allows us to decompose the longevity differentials into differences in health at age 50, differences in mortality conditional on health, and differences in the evolution of health with age. Remarkably, it is the latter that is the most important for most socioeconomic characteristics. For instance, education and wealth are health protecting but have little impact on two-year mortality rates conditional on health. Finally, we document an increasing time trend of all these differentials in the period 1992–2008, and a likely increase in the socioeconomic gradient in mortality rates in the near future. The mortality differences that we find have huge welfare implications that dwarf the differences in consumption accruing to people in different socioeconomic groups.
    Keywords: Life expectancy
    Date: 2012
  10. By: Oliver Hutengs; Georg Stadtmann
    Abstract: We estimate Okun coefficients for five different age cohorts for several Eurozone countries. We find a stable pattern for all countries: The relationship between business-cycle fluctuations and the unemployment rate is the strongest for the youngest cohort and gets smaller for the elderly cohorts.
    Keywords: Okun's law, labor market, youth unemployment
    JEL: E24 F50 C23
    Date: 2012
  11. By: Bergman, Mats A. (Södertörns högskola Institutionen för samhällsvetenskaper); Lundberg, Sofia (Department of Economics, Umeå University); Spagnolo, Giancarlo (Stockholm School of Economics)
    Abstract: Many quality dimensions are hard to contract upon and are at risk of degradation when the service is procured rather than produced in-house. On the other hand, procurement may foster performance-improving innovation. We assemble a large data set on elderly care services in Sweden for the 1990-2009 period, including survival rates, our measure of non-contractible quality, and indicators of subjectively perceived quality of service. We estimate the effects of municipalities’ decision to procure rather than produce in-house on non-contractible quality using a difference-in-difference approach and controlling for a number of other potential determinants. The results indicate that procurement significantly increases non-contractible quality as measured by survival rate, reduces the cost per resident but does not affect subjectively perceived quality.
    Keywords: incomplete contracts; privatization; procurement; quality; elderly care; mortality; outsourcing; nursing home; performance measurement
    JEL: H57 I18 L33
    Date: 2012–09–06

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