nep-age New Economics Papers
on Economics of Ageing
Issue of 2013‒08‒10
nine papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pension reform sustainability in the EU: a pension wealth-based framework By Grech, Aaron George
  2. Bridging the Gap in Pension Participation: How Much Can Universal Tax-Deferred Pension Coverage Hope to Achieve? By Karamcheva, Nadia; Sanzenbacher, Geoffrey
  3. The Effect of Firms' Partial Retirement Policies on the Labour Market Outcomes of Their Employees By Huber, Martin; Lechner, Michael; Wunsch, Conny
  4. Job Satisfaction of Older Workers as a Factor of Promoting Labour Market Participation in the EU: The Case of Slovenia By Aristovnik, Aleksander; Jaklič, Ksenja
  5. What do wages add to the health-employment nexus? Evidence from older European workers By Manuel Flores; Adriaan Kalwij
  6. Optimal Redistributive Pensions with Temptation and Costly Self-Control By Pier-Andre Bouchard St-Amant; Jean-Denis Garon
  7. Learning More About the Causes and Consequences of Migration through the Experiences of Ireland's Older People By Barrett, Alan; Mosca, Irene
  8. Disability Prevalence among Adults: Estimates for 54 Countries and Progress towards a Global Estimate By Sophie Mitra; Usha Sambamoorthi
  9. Short- and Medium-term Effects of Informal Care Provision on Health By Hendrik Schmitz; Matthias Westphal

  1. By: Grech, Aaron George
    Abstract: Most assessments of pension sustainability focus on the projected fall in spending. However interest in the impact on adequacy, usually measured by replacement rates, is increasing. In this paper we show that replacement rates have significant defects, related to being point-in-time indicators and the use of unrepresentative assumptions. We argue for the use of pension wealth calculated using more realistic assumptions. Looking at ten EU countries, we find that while generosity decreased significantly, systems’ effectiveness in alleviating poverty remain strong in countries where minimum pensions were improved. However, moves to link benefits to contributions have raised concerns for women and for those on low incomes. Though reforms have reduced the fiscal challenge of ageing, in many countries pressures will persist and further reforms are likely.
    Keywords: Social Security and Public Pensions; Retirement; Poverty; Retirement Policies.
    JEL: H55 I38 J26
    Date: 2013–04
  2. By: Karamcheva, Nadia (Urban Institute); Sanzenbacher, Geoffrey (Boston College)
    Abstract: In light of the declining pension coverage of low-income workers, policy makers have discussed requiring all employers to offer individual retirement accounts, similar to defined contribution plans. How likely to participate are workers who currently do not have access to a pension plan? We address this question by using plausibly exogenous variation in pension-plan availability to estimate the determinants of participation in a standard selection on unobservables model. We find that currently uncovered low-income workers are fairly likely to participate in a newly offered plan, yet they are much less likely to do so than currently covered workers.
    Keywords: private pensions, participation, self-selection, policy effects
    JEL: J08 J26 J32
    Date: 2013–07
  3. By: Huber, Martin (University of St. Gallen); Lechner, Michael (University of St. Gallen); Wunsch, Conny (VU University Amsterdam)
    Abstract: In this paper, we assess the impact of firms introducing part-time work schemes for gradual labour market exit of elderly workers on their employees' labour market outcomes. The analysis is based on unique linked employer-employee data that combine high-quality survey and administrative data. Our results suggest that partial or gradual retirement options offered by firms are an important tool to alleviate the negative effects of low labour market attachment of elderly workers in ageing societies. When combined with financial incentives to hire unemployed or young jobseekers as replacement, they seem to be particularly beneficial, especially when labour market conditions are difficult. Under such circumstances, they can even have positive spill-over effects on younger workers. Firms should thus be encouraged to offer such schemes.
    Keywords: part-time work, elderly employees, treatment effects, matching
    JEL: J14 J26 C21
    Date: 2013–07
  4. By: Aristovnik, Aleksander; Jaklič, Ksenja
    Abstract: This paper deals with the study of older workers’ job satisfaction as a factor that, combined with other personal and job-related factors, can significantly influence the decision to postpone retirement when this decision is in the hands of an individual. Starting from the fact that the employment rate of older workers in Slovenia in 2011 was the lowest in the EU, the article aims to establish the level of older workers’ job satisfaction in Slovenia compared to the EU, analyse its dimensions, its specifics related to age, gender, sector of economic activities and type of profession, as well as ascertain what determines it the most. A statistical analysis of the results of the Fifth European Working Conditions Survey of 2010 reveals that Slovenia ranks 15th among the EU member states in terms of older workers’ job satisfaction, thus lagging behind the EU average. While Slovenian older workers, the same as their European counterparts, are most satisfied with doing useful work and the least with their prospects for career advancement, a comparison with other EU member states shows that they are relatively dissatisfied with working conditions, salary and adequacy of the motivation to give one’s best performance, and relatively satisfied with doing useful work and with their colleagues. The analysis also shows that the level of older workers’ job satisfaction in Slovenia is determined most by their satisfaction with the adequacy of the motivation to give one’s best performance.
    Keywords: older workers, job satisfaction, employment, labour market participation, EU, Slovenia
    JEL: J14 J20 J26 J28
    Date: 2013–08–02
  5. By: Manuel Flores (University of Santiago de Compostela, IDEGA); Adriaan Kalwij (Utrech University School of Economics)
    Abstract: This paper adds to the empirical literature on health as an important determinant of employment at older ages by exploring the role in the health-employment nexus of the wage rates of 50 to 64-year-old workers. To do so, we use individual-level panel data from the Survey of Health, Ageing and Retirement in Europe to estimate a system of equations for health, wages and employment. Our model also takes into account both the potential for measurement error in the health variable and selectivity issues related to the wage equation. We find that for men (women) a one-unit (one standard deviation) increase in health yields, on average, a 7 (8) percentage higher hourly wage rate, resulting in a 2 (4) percentage point higher employment probability. We also show a direct impact of health on employment: a similar increase in health raises the employment probability of men (women) by 16 (13) percentage points. As regards differences between European countries, our findings suggest that for all country groups, the mediating role of wages in the health-employment nexus is relatively small while the direct impact of health on employment is relatively large and rather similar. Overall, our findings indicate only a minor role for disability income policies likes wage subsidies to encourage the employment of (older) workers with health limitations, but an instrumental role for policy aimed at helping employers accommodate these workers on the job and keep them employed at older ages.
    Keywords: Health, wages, employment
    JEL: D00 I10 J14 J20 J30
    Date: 2013–07
  6. By: Pier-Andre Bouchard St-Amant (INET, Columbia and Queen's); Jean-Denis Garon (UQAM)
    Abstract: We characterize an optimal redistributive pension scheme when individuals exert costly self-control in the face of temptation. We revisit the idea that this scheme reduces the cost of self-control. Individuals are heterogenous in both the intensity of their self-control problems and their productivity. Pensions simultaneously have three effects: redistributing income across retirees, forcing workers to save, and influencing the cost of exerting self-control. In the optimal policy, the effect of taxation on the cost of self-control is fundamentally related to the redistributive level of the pension system. Proportional pension taxation has an adverse effect on the mental of self-control when temptation declines with income. This partially offsets the forced-saving benefits of the system, and call for a more redistributive scheme. If temptation increases with income, taxation unambiguously reduces the cost of self-control only if the benefit structure taxes individuals for their contributions. Otherwise, taxation also increases such cost, unless the temptation problem is of weak intensity. This negative welfare effect gets worse when the intensity of self-control problems increases. These results contrasts with a first best optimum, where the mental cost of self-control is driven to zero and consumption is smoothed across periods.
    Keywords: Taxation, Redistribution, Pensions, Self-Control
    JEL: H55 H21 D03
    Date: 2013–08
  7. By: Barrett, Alan; Mosca, Irene
    Keywords: Ireland/migration/older/qec
    Date: 2013–06
  8. By: Sophie Mitra (Fordham University); Usha Sambamoorthi (West Virginia University)
    Abstract: Objectives: We estimated disability prevalence among adults at global, regional and country levels using internationally comparable disability data and measure. Methods: We conducted a retrospective analysis of data from the World Health Survey (WHS) (2002--2004) for nationally representative samples of civilian, non-institutionalized populations in 54 countries. A disability was measured as having at least one severe or extreme difficulty with bodily functions (seeing, concentrating) and activities (moving around, self--care) based on an individual’s self-reports. Results: In the 54 countries under study, severe or extreme functional or activity difficulties are highly prevalent. For all countries, disability prevalence is estimated at 14% for all adults. Low and middle income countries have higher disability prevalence compared to high income countries. Among subgroups, disability prevalence stands at 12% amon working age adults and 39% among the elderly. Women have higher prevalence than men. Conclusions: Disability is found to be highly prevalent among adults, with an estimated global prevalence at 14%. Disability deserves enhanced policy attention and resources in public health and international development.
    Keywords: Disability prevalence, Development
    JEL: I1 J14
    Date: 2013
  9. By: Hendrik Schmitz; Matthias Westphal
    Abstract: This paper estimates the effect of informal care provision on female caregiver’s health. We use data from the German Socio-economic Panel and assess effects up to seven years after care provision. A simulation-based sensitivity analysis scrutinizes the sensitivity of the results with respect to potential deviations from the conditional independence assumption in the regression adjusted matching approach. The results suggest that there is a considerable short-term eff ect of informal care provision on mental health which fades out over time. Five years after care provision there are no signifi cant effects left. Both short- and medium-term effects on physical health are much smaller and insignificant throughout.
    Keywords: Informal care; regression adjusted matching; propensity score matching; mental health; physical health
    JEL: I10 I18 C21 J14
    Date: 2013–07

This nep-age issue is ©2013 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.