nep-age New Economics Papers
on Economics of Ageing
Issue of 2013‒10‒05
eight papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Too Old to Work, Too Young to Retire? By Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Andrea Ichino
  2. Accounting for the Rise of Health Spending and Longevity By Fonseca, Raquel; Michaud, Pierre-Carl; Kapteyn, Arie; Galama, Titus
  3. Unprivatizing the Pension System: The Case of Poland By Jan Hagemejer; Krzysztof Makarski; Joanna Tyrowicz
  4. The impact of an ageing population on economic growth: an exploratory review of the main mechanisms By Renuga Nagarajan; Aurora A.C. Teixeira; Sandra T. Silva
  5. The impact of population ageing on economic growth: an in-depth bibliometric analysis By Renuga Nagarajan; Aurora A.C. Teixeira; Sandra T. Silva
  6. Emerging Trends in Biomedicine and Health Technology Innovation: Addressing the Global Challenge of Alzheimer's By OECD
  7. Does longevity improvement always raise the length of schooling through the longer-horizon mechanism? By Sau-Him Lau
  8. Literature Review on Employability, Inclusion and ICT, Part 1: The Concept of employability, with a specific focus on Young people, older workers and migrants By Anne Green; Maria de Hoyos; Sally-Anne Barnes; David Owen; Beate Baldauf; Heike Behle

  1. By: Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Andrea Ichino
    Abstract: We study whether employment prospects of old and young workers differ after a plant closure. Using Austrian administrative data, we show that old and young workers face similar displacement costs in terms of employment in the long-run, but old workers lose considerably more initially and gain later. We interpret these findings using a search model with retirement as an absorbing state, that we calibrate to match the observed patterns. Our finding is that the dynamics of relative employment losses of old versus young workers after a displacement are mainly explained by different opportunities of transition into retirement. In contrast, differences in layoff rates and job offer arrival rates cannot explain these patterns. Our results support the idea that retirement incentives, more than weak labor demand, are responsible for the low employment rates of older workers.
    Keywords: Aging, Employability, Plant Closures, Matching
    JEL: J14 J65
    Date: 2013–08
  2. By: Fonseca, Raquel (University of Québec at Montréal); Michaud, Pierre-Carl (University of Québec at Montréal); Kapteyn, Arie (University of Southern California); Galama, Titus (University of Southern California)
    Abstract: We estimate a stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and longevity in the U.S. over the period 1965-2005. We estimate that technological change and the increase in the generosity of health insurance on their own may explain 36% of the rise in health spending (technology 30% and insurance 6%), while income explains only 4% and other health trends 0.5%. By simultaneously occurring over this period, these changes may have led to complementarity effects which we find to explain an additional 57% increase in health spending. The estimates suggest that the elasticity of health spending with respect to changes in both income and insurance is larger with co-occurring improvements in technology. Technological change, taking the form of increased health care productivity at an annual rate of 1.3%, explains almost all of the rise in life expectancy at age 25 over this period, while changes in insurance and income together explain less than 10%. Welfare gains are substantial and most of the gain appears to be due to technological change.
    Keywords: health spending, longevity, life-cycle models, technological change
    JEL: I10 I38 J26
    Date: 2013–09
  3. By: Jan Hagemejer (National Bank of Poland; Faculty of Economic Sciences, University of Warsaw); Krzysztof Makarski (National Bank of Poland; Warsaw School of Economics); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)
    Abstract: In many countries the fiscal tension associated with the global financial crisis brings about the discussion about unprivatizing the social security system. This paper employs an OLG model to assess ex ante the effects of such changes to the pension reform in Poland from 1999 as implemented in 2011 and proposed in 2013. We simulate the behavior of the economy without the implemented/proposed changes and compare it to a status quo defined by the reform from 1999. We find that the changes implemented in 2011 and all of the proposed reform scenarios from 2013 are detrimental to welfare. The effects on capital and output are small and depend on the selected fiscal closure. Implied effective replacement rates are lower. These findings are robust to time inconsistency. The shortsightedness of the governments imposes welfare costs.
    Keywords: OLG, PAYG, pension system reform, time inconsistency
    JEL: C68 E17 E25 J11 J24 H55 D72
    Date: 2013
  4. By: Renuga Nagarajan (CEF.UP, Faculdade de Economia da Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto, OBEGEF); Sandra T. Silva (CEF.UP, Faculdade de Economia da Universidade do Porto)
    Abstract: Although a myriad of important theoretical and empirical contributions on ageing populations exist, these contributions are diffuse and lack an integrated vision of the distinct mechanisms through which ageing populations impact on economic growth. As such, in this paper we survey the literature that provides insights on the ageing population and its effect on economic growth. In particular, we sought to uncover the main mechanisms through which ageing impacts on economic growth. The literature review shows that the impact of ageing on the performance of countries is intimately related to the mechanism elected. About 70% of the empirical studies that focused on the ‘public social expenditure’ mechanism convey a negative impact of ageing on economic performance, whereas the majority (60%) of empirical studies that focus on ‘human capital’ fail to uncover any significant statistical relation between ageing and the economic growth proxy and the positive impact is more closely related to the ‘consumption and saving patterns’ mechanism. Estimation methodologies also seem to be associated with distinct impacts of ageing on economic growth, with less sophisticated econometric methods (i.e. OLS and panel) being most often associated with negative (cor)relations. The bulk of the empirical evidence concerns developed countries (and the ‘public social expenditure’ mechanism), with most of the analysis indicating a negative and significant relation between ageing and growth. Given that developed, developing and even the least developed countries are/will be affected by the phenomenon of an ageing population, knowing the degree to which the influence of ageing varies among countries (including developing and the least developed), and through which mechanisms, is essential to specifying sound public policies.
    Keywords: Ageing; economic growth; consumption and saving patterns; public expenditure; human capital
    JEL: J1 O4
    Date: 2013–09
  5. By: Renuga Nagarajan (CEF.UP, Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto, OBEGEF); Sandra T. Silva (CEF.UP, Faculdade de Economia, Universidade do Porto)
    Abstract: The phenomenon of population ageing and its influence on the economic growth of countries has long been the focus of major concern for both governments and the scientific community. Considering the scientific contributions that have been published on the matter in recent years, it seems timely to take a comprehensive and objective account of this stream of the literature. Using bibliometric techniques and based on 144 articles centred on ageing and economic growth gathered from Scopus, we found some interesting evidence: 1) ageing has increasingly attracted more researchers within economics-related literature; 2) more recently, studies have revealed the willingness of researchers to evaluate less immediate mechanisms relating ageing and economic growth, most notably consumption and saving patterns, and human capital; 3) there is a growing need in ageing research to test economic phenomena with real–world data against the theory, as reflected by the noticeable increase in the use of empirical methods; 4) Multivariate analyses have become more prominent since 2006, contrasting with a continuous fall in empirical analyses based on ‘Mathematical modelling’; 5) the effect of an ageing population on economic growth does not essentially vary according to the main mechanism through which ageing impacts on growth (being predominantly negative), but it does vary with the empirical methodologies used; 6) there are very few or a complete lack of studies on developing and less developed countries. The absence of empirical studies on ageing and economic growth for less developed countries combined with the fact that the ratio of an older population in such countries is expected to significantly increase over the next thirty years, makes this topic an imperative for future research.
    Keywords: Ageing population, Economic growth, Bibliometrics, Less developed countries
    JEL: J10 H50 O30 C89
    Date: 2013–09
  6. By: OECD
    Abstract: The economic and social impact of chronic brain disorders (CBD) such as Alzheimer’s disease (AD) and other neurodegenerative diseases will become the number one public-health problem worldwide, directly affecting 100 million people by 2050. On-going demographic trends, namely ageing populations worldwide, are leading to the unprecedented expansion of consumer demand for healthcare services. Healthcare systems worldwide soon will confront a serious crisis as a result of significant growth of the healthcare market, in a climate of shrinking resources.
    Date: 2013–06–14
  7. By: Sau-Him Lau (University of Hong Kong)
    Abstract: Hazan (2009) performs empirical analysis based on the conjecture that a necessary condition for higher life expectancy to cause longer schooling years is that it also increases lifetime labor supply, and reaches controversial conclusions. We aim to examine the theoretical validity of Hazan's (2009) conjecture, and more generally, to understand the relation between these two conditions in a standard life-cycle model. We find that the relation between the effects on optimal schooling years and expected lifetime labor supply differs systematically with respect to mortality reductions at different stages of the life cycle. Based on these systematic differences, we find that longer lifetime labor supply is not sufficient for increased schooling years for mortality reductions during the schooling years, and not necessary for increased schooling years for some mortality reductions during the working years. We provide explanations regarding why Ben-Porath’s (1967) longer-horizon mechanism in the analysis of the timing of human capital investment is not always applicable to the question regarding the impact of mortality decline on human capital investment.
    Date: 2013
  8. By: Anne Green (University of Warwick, Institute for Employment Research); Maria de Hoyos (University of Warwick, Institute for Employment Research); Sally-Anne Barnes (University of Warwick, Institute for Employment Research); David Owen (University of Warwick, Institute for Employment Research); Beate Baldauf (University of Warwick, Institute for Employment Research); Heike Behle (University of Warwick, Institute for Employment Research)
    Abstract: IPTS has launched a research project on how ICT can support employability, in the context of its policy support activities for the implementation of the Europe 2020 strategy, and the Digital Agenda for Europe. As a first step, JRC-IPTS contracted the Institute of Employment Research, University of Warwick, UK to prepare: a) a review of the literature on employability, its dimensions and the factors which affect it in general and for groups at risk of exclusion, namely migrants, youth and older workers; and b) a report on how ICT contribute to employability, support the reduction of barriers and create pathways to employment for all and also for the three specific groups at risk of exclusion. This report presents the findings of the first part of the research.
    Keywords: Employability, inclusion, migrants, youth, older workers
    Date: 2013–03

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