nep-age New Economics Papers
on Economics of Ageing
Issue of 2012‒10‒27
sixteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Public Pension Benefits Claiming Behavior: New Evidence from the Japanese Study on Aging and Retirement By Shimizutani, Satoshi; Oshio, Takashi
  2. Japan's 2012 Social Security Pension Reform By Takayama, Noriyuki
  3. Reformed Pensions Systems in Central and Eastern Europe: Challenges to future safe pension benefits By Lazarevski, Dimche; Mrsik, Jadranka
  4. The Relationship between Work Decisions and Location Later in Life By Kevin E. Cahill; Michael D. Giandrea; Joseph F. Quinn
  5. Bridge Jobs in Europe By Brunello, Giorgio; Langella, Monica
  6. Are Aging Baby Boomers Squeezing Young Workers Out of Jobs? By Alicia H. Munnell; Rebecca April Yanyuan Wu
  7. The Changing Causes and Consequences of Not Working Before Age 62 By Barbara A. Butrica; Nadia Karamcheva
  8. The Viability of a Voting System that Allocates Parliamentary Seats According to Life Expectancy: An analysis using OLG models By Oguro, Kazumasa; Ishida, Ryo
  9. Reform of Ill-health Retirement Benefits for Police in England and Wales: The roles of National Policy and Local Finance By Rowena Crawford; Richard Disney
  10. Specific Measures for Older Employees and Late Career Employment By Bernhard Boockmann; Jan Fries; Christian Göbel
  11. Self-Rated Health Status of the Japanese and Europeans in Later Life: Evidence from JSTAR and SHARE By Fujii, Mayu; Oshio, Takashi; Shimizutani, Satoshi
  12. Aging, labour market dynamics and fiscal imbalances By Luca Marchiori; Olivier Pierrard; Henri R. Sneessens
  13. Aging and Productivity: Evidence from Piece Rates By Pekkarinen, Tuomas; Uusitalo, Roope
  14. Age and Complementarity in Scientific Collaboration By Matthias Krapf
  15. Egalitarism under Population Change. The Role of Growth and Lifetime Span By Raouf Boucekkine; Giorgio Fabbri; Fausto Gozzi
  16. Marriage as women's old age insurance : evidence from migration and land inheritance practices in rural Tanzania By Kudo, Yuya

  1. By: Shimizutani, Satoshi; Oshio, Takashi
    Abstract: This paper explores the public pension claiming behavior of the Japanese. First, we perform financial simulations and estimate the expected utility, depicting the typical patterns of pension benefits over a life cycle. We show that the optimal retirement age depends on the beneficiaries’ mortality risk, discount rate, initial wealth, and risk attitude. Second, we use individual-level data from the Japanese Study on Aging and Retirement to examine empirically the determinants of the take-up timing. We find supportive evidence that most of the factors examined in the simulation are indeed significantly associated with early claiming of pension benefits for wage earners.
    Keywords: Claiming behavior, Pension benefit, Survival probability, Risk attitude, Japanese Study on Aging and Retirement
    JEL: H55 J26
    Date: 2012–10
  2. By: Takayama, Noriyuki
    Date: 2012–10
  3. By: Lazarevski, Dimche; Mrsik, Jadranka
    Abstract: The objective of this paper is to examine and analyze empirically whether the Central and Eastern Europe countries` reformed pension systems are providing adequate and safe pensions. Starting in 1990s, most Central and Eastern European countries radically reformed their pension systems. The rising optimism initiates many studies where the advantages of the reforms were in the focus. The global financial crisis negatively affects the reformed pension systems. As a response, the policy makers in few of those countries decided to set up different measures: increasing or reducing the pension contribution for alleviating the fiscal deficit or encouraging the employment, adapting the contribution rate and allowing individuals to switch back to the old system. These last changes in the pension systems have triggered the following question: How much and in which way the implementation and experiences gained with the functioning of the reform pension system will have impact in the future pension adequacy and sustainability of the pension system?
    Keywords: reformed pension systems; financial crisis; sustainability of pension systems; government measures; pension contributions; pension benefits
    JEL: H55 G23 J32 J26 G10
    Date: 2012–05
  4. By: Kevin E. Cahill (Sloan Center on Aging and Work at Boston College); Michael D. Giandrea (U.S. Bureau of Labor Statistics); Joseph F. Quinn (Boston College)
    Abstract: To what extent does continued work later in life in the form of bridge job employment impact the relocation decisions of older Americans? Continued work later in life has been suggested as a way for older workers to help maintain their standard of living in retirement, by increasing income in the near term and simultaneously delaying the date at which assets are drawn down. While the financial benefit of continued work is straightforward and potentially large, the ripple effects of continued work can impact the lives of older Americans in many other ways. This paper focuses on relocation decisions following career employment. We use the Health and Retirement Study (HRS), an ongoing nationally-representative longitudinal survey of older Americans that began in 1992, to explore the frequency and determinants of relocations among career workers who moved to a bridge job relative to those who exited from the labor force directly. For both groups we find that long-distance relocations following career employment were infrequent, as less than one in twenty career workers moved to a new Census Division. Moves that involved a change in “area” or change in residence, however, were much more common, with a frequency at the time of transition from career employment of 9 percent and 15 percent, respectively. Most importantly, the frequency of moves was similar for those who took bridge jobs and those who exited directly, as were key determinants of moves, suggesting that continued work does not significantly limit or promote relocations.
    Keywords: Economics of Aging, Partial Retirement, Gradual Retirement
    JEL: J26 J14 J32 H55
    Date: 2012–10
  5. By: Brunello, Giorgio (University of Padova); Langella, Monica (University of Padova)
    Abstract: We study the transitions from career to bridge jobs and to permanent retirement by European males aged 55 to 70 at the time of the interview in the late 2000s. We find that only 10.54 percent of the workers in our sample who were in a career job at age 50 have moved to a bridge job by the time of the interview, much less than what usually found in the United States. We also show that the exogenous increases in minimum retirement age that occurred during the past twenty years have had different effects in Central / Northern Europe (Austria, Switzerland, The Netherlands and Sweden) and in Mediterranean Europe (Italy and Spain). In the North, transitions into bridge jobs have increased, with no significant effect on transitions into retirement. In the South, transitions into permanent retirement have decreased, with no significant effect on transitions into bridge jobs.
    Keywords: ageing, retirement, Europe
    JEL: J26
    Date: 2012–10
  6. By: Alicia H. Munnell; Rebecca April Yanyuan Wu
    Abstract: As life expectancy increases and the retirement income system contracts, households face an enormous challenge in ensuring a secure retirement. Working longer is often hailed as the best way to increase retirement incomes. But some suggest that more work by older persons reduces the job opportunities for younger persons. This contention, known as the “lump of labor” theory, is widely accepted in many European countries and has provided an economic rationale for early retirement programs. However, economists in the United States generally reject this theory, arguing that the labor market is dynamic and the economy can adapt to labor force changes. Nevertheless, “crowding out” has received increased media attention in the wake of the Great Recession and, if generally accepted, could impede the trend towards working longer. This brief investigates whether any empirical support exists for the lump of labor theory. The report proceeds as follows. The first section introduces the lump of labor theory and summarizes the existing evidence. The second section describes the data and basic methodology used in the analysis. The third section presents the baseline results, followed by the results of numerous tests of the strength of the findings. The fourth section describes the results of a separate test for the Great Recession. The fifth section identifies the causal relationship between the labor force activity of the old and the young. The final section concludes that there is no evidence that increasing the employment of older persons reduces the job opportunities or wage rates of younger persons.
    Date: 2012–10
  7. By: Barbara A. Butrica; Nadia Karamcheva
    Abstract: This study uses the Health and Retirement Study to deepen our understanding of nonworking adults ages 51 to 61 and how they support themselves before qualifying for Social Security benefits. The results show that nonworking adults ages 51 to 61 are a heterogeneous group. A large share is poor, with low incomes and limited wealth. But a sizeable share has low incomes and abundant wealth. These individuals are income poor but asset rich. More than for singles, this phenomenon characterizes nonworking married adults. In general, we find that nonworking married adults are significantly better off than their unmarried counterparts. Many nonworking married adults have working spouses. On average, married adults without earnings have twice the per person income and more than ten times the per person assets of single adults without earnings. Additionally, married adults without earnings are 20-30 percentage points less likely to be poor than single adults without earnings. It is important for policymakers to understand who stops working early and how they support themselves. Nonworkers may be more likely to apply and qualify for Social Security disability and SSI benefits. Also, more than any other group, nonworkers will be adversely impacted by any increases to the early entitlement age. Finally, nonworkers are especially vulnerable in retirement because they are likely to have lower savings, Social Security benefits, and pensions than workers.
    Date: 2012–02
  8. By: Oguro, Kazumasa; Ishida, Ryo
    Abstract: This paper constructs an overlapping generations model in order to demonstrate low political intervention and interaction in the working and retired generations affect the allocation rate in future growth-stimulating public investment and the public pension. It also analyzes the possibility of moving to a voting system that allocates parliamentary seats according to life expectancy. The presented results suggest the following three main findings. Firstly, the voting system is important when population demographics change. Declining birthrates and an aging population may shorten the temporal perspective for policymaking over time. Any theoretical transition from the current voting system to a voting system that allocates parliamentary seats according to life expectancy would thus lengthen the temporal perspective for policymaking, potentially increasing the public investment rate and improving the utilities of the working and future generations. Secondly, when age-based voting turnout disparity is high, the shift from the current voting system to one based on life expectancy and region or life expectancy and age is possible. Thirdly, if both transitions from the current system are possible, moving to the latter would offer greater possibility for increasing the utilities of the working generation and future generations than moving to the former.
    Keywords: Public investment, Public pension, OLG model, Generational-based constituency bloc, Demeny voting system, Life expectancy
    JEL: D90 H50 H60 J18 O20
    Date: 2012–10
  9. By: Rowena Crawford; Richard Disney
    Abstract: We examine the ill-health retirement of police officers in the forces of England and Wales between 2002-03 and 2009-10. Differences in ill-health retirement rates across forces are statistically related to area-specific stresses of policing and force-specific differences in human resources policies. Reforms to police pension plans – in particular a shift in the incidence of financing ill-health retirement from central government to local police authorities – occurred in the mid-2000s. We show these measures impacted on the level of ill-health retirement, especially on forces with above-average rates of retirement. We find that residual differences in post-2006 ill-health retirement rates across forces are related to their differential capacities to raise revenue from local property taxes.
    JEL: H75 J26 J45
    Date: 2012–10
  10. By: Bernhard Boockmann; Jan Fries; Christian Göbel
    Abstract: We analyse the effects of specific measures for older employees (SMOE) on employment duration of workers aged 40 and above. Using longitudinal employer-employee data for German establishments, we account for worker and establishment heterogeneity and correct for stock-sampling. We find a positive effect of mixed-aged team work on employment duration and a negative effect of a part-time scheme addressed at older workers. Employment duration does not appear to be related to other SMOE, such as training and specific equipment of workplaces.
    Keywords: older workers, human resources policies, SMOE, employment duration,linked employer-employee data, age, tenure.
    JEL: J14 J21 J26
    Date: 2012–10
  11. By: Fujii, Mayu; Oshio, Takashi; Shimizutani, Satoshi
    Abstract: Using panel data from two surveys in Japan and Europe, we examine the comparability of the self-rated health of the middle-aged and elderly across Japan and the European countries and the survey periods. We find that a person’s own health is evaluated on different standards (thresholds) across the different countries and survey waves. When evaluated on common thresholds, the Japanese elderly are found to be healthier than their counterparts in the European countries. At the individual level, reporting biases leading to discrepancies between the changes in individuals’ SRH and their actual health over the survey waves are associated with age, education, and country of residence
    Keywords: self-rated health status, response bias, JSTAR, SHARE
    JEL: C42 I12
    Date: 2012–10
  12. By: Luca Marchiori (Banque centrale du Luxembourg); Olivier Pierrard (Banque centrale du Luxembourg); Henri R. Sneessens (Université du Luxembourg, IZA and Universite catholique de Louvain)
    Abstract: Population aging is a phenomenon common to all regions in the developed world, forcing most governments to implement structural reforms in order to avoid the development of fiscal imbalances. In Luxembourg, large inflows of – young – foreign workers generate an apparently sound public pension system, although no major structural reform has been implemented yet. In this paper, we study the interactions between demographic changes, labour market dynamics and public finance, by building an overlapping generations structure with New Open Macroeconomics and labour market frictions à la Diamond- Mortensen-Pissarides. We calibrate the model on Luxembourg data and we show that foreign labour inflows are a palliative but not a long term solution to the fiscal consequences of aging, and that only deep – and unpopular – fiscal reforms could solve the expected deficit problem. We also show that without foreign trade, foreign labour inflows would increase the domestic unemployment rate. This underlines the need to combine in a single framework the NOEM and the search and matching approaches.
    Keywords: Overlapping Generations, Aging, Fiscal Imbalances
    JEL: D91 E24 E62 F41 J11
    Date: 2012
  13. By: Pekkarinen, Tuomas (Aalto University); Uusitalo, Roope (HECER)
    Abstract: We evaluate the effects of aging on productivity using piece-rate earnings as a proxy for worker output. Our data contain the population of Finnish blue collar workers in 61 different industries during 1990-2002. A unique feature of the data is that we can observe the exact hours worked on piece rates and on fixed time rates as well as earnings under both performance schemes. We account for the selection into piece rates by using firm-level changes in pay systems as instruments for the probability of working on piece rates. A subset of workers also receive both piece rates and time rates within the same quarter. For these workers, we can directly compare the age profile of hourly earnings under piece rates and fixed rates. The results indicate that productivity increases with age until age 40 after which it stays roughly constant. Wage growth is faster than productivity growth for young workers but after age 40 both wages and productivity grow approximately at the same rate.
    Keywords: piece rates, productivity, aging
    JEL: J1 J24 J33
    Date: 2012–10
  14. By: Matthias Krapf (University of Vienna, Department of Business Administration, Austria)
    Abstract: I model research quality as the outcome of a CES production technology that uses human capital measured by publication records as inputs. Investigating a sample of scientific publications with two co-authors I show that the CES-complementarity parameter is a function of the age difference of the authors. Complementarity is maximized if the age difference between the authors is about 10 years. Two theories are presented which may explain my findings. According to these models, older and younger researchers differ not only in their skill levels but also in the types of their skills and their interpersonal relationships.
    Keywords: Academic Collaboration, CES Technology, Team production, Human Capital
    JEL: A14 D24 I23 J24
    Date: 2012–10–17
  15. By: Raouf Boucekkine (Aix-Marseille Université, Greqam and UCL, Ires-Core); Giorgio Fabbri (Università di Napoli Parthenope and UCL, Ires); Fausto Gozzi (Università di Napoli Parthenope)
    Abstract: We study the compatibility of the optimal population size concepts produced by different social welfare functions and egalitarism meant as “equal consumption for all individuals of all generations”. Social welfare functions are parameterized by an altruism parameter generating the Benthamite and Millian criteria as polar cases. The economy considered is in continuous time and is populated by homogenous cohorts with a given life span. Production functions are linear in labor, (costly) procreation is the unique way to transfer resources forward in time. First, we show that egalitarism is optimal whatever the degree of altruism when life spans are infinite. That is egalitarism does not discriminate between the social welfare functions considered. However, when life spans are finite, egalitarism does not arise systematically as an optimal outcome. In particular, it depends on the degree of altruism, and also on the magnitude of the life span. In particular, to be enforced in a growing economy, that is when population growth is optimal in the long-run, this egalitarian rule can only hold when (i) the welfare function is Benthamite, (ii) and for a large enough life span. When altruism is impure, egalitarism is impossible in the context of a growing economy. Either in the Millian case, whatever the life span, or in the Benthamite/impure altruism cases, for small enough life spans, procreation is never optimal, leading to finite time extinction and maximal consumption for all existing individuals.
    Keywords: Egalitarism, Population change, Optimal population, size, Benthamite Vs Millian criterion, Finite lives, Growth
    JEL: D63 D64 C61 O40
    Date: 2012–04–12
  16. By: Kudo, Yuya
    Abstract: In a traditional system of exogamous and patrilocal marriage prevalent in much of Sub-Saharan Africa, when she marries, a rural woman typically leaves her kin to reside with her husband living outside her natal village. Since a village that allows a widow to inherit her late husband's land can provide her with old age security, single females living outside the village are more likely to marry into the village. Using a natural experimental setting, provided by the longitudinal household panel data drawn from rural Tanzania for the period from 1991 to 2004, during which several villages that initially banned a widow's land inheritance removed this discrimination, this study provides evidence in support of this view, whereby altering a customary land inheritance rules in a village in favor of widows increased the probability of males marrying in that village. This finding suggests that providing rural women with old age protection (e.g., insurance, livelihood protection) has remarkable spatial and temporal welfare effects by influencing their decision to marry.
    Keywords: Tanzania, Social security, Women welfare, Land tenure, Aged, Migration, Demography, Gender empowerment, Land ownership, Social custom, Widowhood
    JEL: J12 J14 K11 Q15 R23
    Date: 2012–09

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