nep-age New Economics Papers
on Economics of Ageing
Issue of 2013‒06‒09
eight papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pensionamento flessibile e (ri)equilibrio tra generazioni By Salerno, Nicola Carmine
  2. How Public Pension affects Elderly Labor Supply and Well-being: Evidence from India By Neeraj Kaushal
  3. Achieving Fiscal Balance in Japan By Sagiri Kitao; Selahattin Imrohoroglu; Tomoaki Yamada
  4. Asset Market Participation and Portfolio Choice over the Life-Cycle By Luigi Guiso; Charles Gottlieb; Andreas Fagereng
  5. Esperanza de vida y causas de muerte: Un análisis de descomposición (1975-2009) By Goerlich Gisbert Francisco J.
  6. From Malthusian to Modern fertility: When intergenerational transfers matter By Luca Spataro; Luciano Fanti
  7. Growth and Demography in Turkey: Economic History vs. Pro-Natalist Rhetoric By Attar, M. Aykut
  8. Younger and Older Households in the Crisis By Gerlach, Petra

  1. By: Salerno, Nicola Carmine
    Abstract: The paper proposes a method to speed up the transition toward the notional contributions pension system in Italy. It seems the most appropriate manner to combine and pursue employment and financial sustainability goals. The method computes percentages for abating the old retributive pensions taking into account the distance from the effective age /seniority at retirement at standard/pivotal values for age/seniority.
    Keywords: retirement, generational accounting, flexible retirement, labour market, actuarial neutralty, employment, unemployment, productivity, welfare, welfare system, financial sustainability, long-term sustainability, structural reforms, young workers, old workers
    JEL: A1 A10 D0 D04 D6 D61 E6 E60 E62 H0 H2 H5 H53 H55 I0 I3 I31 J08 J1 J14
    Date: 2013–05–22
  2. By: Neeraj Kaushal
    Abstract: We study the effect of a recent expansion in India’s National Old Age Pension Scheme on elderly well-being. Estimates suggest that public pension has a modestly negative effect on the employment of elderly/near elderly men with a primary or lower education but no effect of the employment of similar women. Pension raised family expenditures, lowering poverty, and the effect was smaller on families headed by illiterate persons suggesting lower pension coverage of this most disadvantaged group. Further, households spent most of the pension income on medical care and education. We find some weak evidence that pension raised longevity.
    JEL: I3
    Date: 2013–05
  3. By: Sagiri Kitao (Hunter College; Hunter College); Selahattin Imrohoroglu (University of Southern California, Marshall School of Business); Tomoaki Yamada (Meiji University)
    Abstract: Japan’s population is aging fast and the ratio of Japanese Government Bonds (JGBs) to GDP is highest among advanced economies. In addition, further government spending is expected, causing concerns about the potential for JGBs to become a significant global issue. In this paper we build a micro-data based, large-scale overlapping generations model for Japan in which individuals differ in age, gender, employment type, income, and asset holdings, and incorporate the Japanese pension rules in detail. We estimate age-consumption and age-earnings profiles from micro data, assume complete markets and use these to generate tax revenues and transfer payments for government accounts. We calibrate the model so that it replicates the main macroeconomic and fiscal indicators for 2010. Using existing pension law and fiscal parameters and the medium variants of fertility and survival probability projections, we produce future time paths for JGBs and the pension fund.
    Keywords: Fiscal balance, Social security, Demographic trends
    JEL: H60 H55 J11
    Date: 2013
  4. By: Luigi Guiso; Charles Gottlieb (Oxford University); Andreas Fagereng (European University Institute)
    Abstract: Models of life cycle portfolio decisions with labor income uniformly predict that investors should reduce their portfolio share in stocks as they age because human capital, which acts a bond, becomes a smaller component of household total wealth. Despite the fact that the prediction rests on an undisputed fact - the shrinking pattern of human wealth over the life cycle - it has not yet found empirical support. We study the life cycle portfolio allocation using a random sample of 75,000 households drawn from the Norwegian Tax Registry followed over 14 years which contains exhaustive and error-free information on all components of households’ investments. We find that both participation in the stock market and the portfolio share in stocks have important life cycle patterns. Participation is limited at all ages but follows a hump-shaped profile which peaks around retirement; as households retire and begin decumulating wealth, they start exiting the stock market. The share invested in stocks among the participants is high and flat for the young but investors start reducing it slowly as retirement age gets closer. Our data suggest a double adjustment as people age: a rebalancing of the portfolio away from stocks as they approach retirement, and stock market exit after retirement. Existing calibrated life cycle models can account for the first behavior but not the second. We show that extending the models in Gomes, Kotlikoff, and Viceira (2008) and Gomes and Michaelides (2003) to incorporate reasonable per period participation costs can generate a joint pattern of participation and the risky asset share over the life cycle similar to the one observed in the data. In addition, if we add a small perceived probability of being cheated when investing in stocks, the model predicts a share in stocks much closer to the one observed in the data.
    Date: 2012
  5. By: Goerlich Gisbert Francisco J. (Ivie; Universidad de Valencia)
    Abstract: This working paper examines differences in life expectancy at birth across time, space and sexes, focusing on two origins: 1) changes in age-specific mortality rates; and 2) changes in age-specific mortality rates by cause of death. We use decomposition methods in life expectancy differentials and show that the biggest contribution comes from reductions in mortality at advanced ages. In relation to the cause of death decomposition, we observe that the primary cause of differences is cardiovascular diseases, with a decreasing tendency, while on the contrary we observe a growing importance of cancer in all three dimensions analyzed. For the rest of the causes, results are more heterogeneous.
    Keywords: Life expectancy, mortality causes, life tables, International Classification of Diseases (ICD).
    JEL: J11
    Date: 2012–09
  6. By: Luca Spataro; Luciano Fanti
    Abstract: In a standard OLG model of a small open economy with logarithmic utility and endogenous fertility we show that the reversion of the relationship between fertility and wages (i.e. a transition from the Malthusian to the Modern fertility behaviour) may be possible in presence of intergenerational public transfers(i.e. public national debt or PAYG pensions). In fact, as known, the latter have been implemented mostly in the advanced Western Countries, where the fertility behavior reversion has mainly occurred. We show that such a reversion is more likely to occur in economies that are entailed with low interest rate, low costs for raising children and low degree of patience, and high preference for children.
    Keywords: overlapping generations, endogenous fertility, savings,small open economy, public national debt, PAYG pension scheme,demographic transition.
    JEL: D91 E62 H63 J13
    Date: 2013–05–01
  7. By: Attar, M. Aykut
    Abstract: This paper projects the effects of exogenous fertility changes in Turkey on the age structure of population and the standards of living using a semi-reduced-form model of economic growth and demographic change. Both the technological progress and the fertility rate are endogenous. The calibrated version of the model delivers three important results: First, technological progress will be the major source of economic growth in Turkey in the upcoming decades. Second, even with a non-declining saving rate, the population aging will result in a growth slowdown since technological progress is not fast enough in Turkey. Third, even under an increasing rate of technological progress, a permanent upward shift in fertility levels would imply, relative to the benchmark, a significantly lower level of output per capita, a remarkably higher level of dependent population, and a persistently lower share of the working-age population for many decades. These results suggest that the priority of policy-makers in Turkey should be technological progress. The pro-natalist rhetoric, even if it proves to be strong enough to persuade the people of Turkey to have more children in the near future, does not have any economic significance.
    Keywords: fertility, population aging, population policy, technological progress.
    JEL: C63 E17 O11 O33
    Date: 2013–05–24
  8. By: Gerlach, Petra
    Keywords: older/qec
    Date: 2013–05

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