nep-age New Economics Papers
on Economics of Ageing
Issue of 2014‒05‒24
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pathways to Retirement and the Role of Financial Incentives in Sweden By Per Johansson; Lisa Laun; Mårten Palme
  2. The Incentive Effects of Minimum Pensions: extended version By Sergi Jiménez-Martín
  3. Income tax and retirement schemes By Philippe Choné; Guy Laroque
  4. What did retirement cost back then? The evolution of corrody prices in Holland, c. 1500-1800 By Jaco Zuijderduijn
  5. Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement - Introduction and Summary By Courtney Coile; Kevin S. Milligan; David A. Wise
  6. A formal investigation of inequalities in health behaviours after age 50 on the Island of Ireland By Eibhlin Hudson; David Madden; Irene Mosca
  7. Do partial disability pensions close the earnings gap? By Cueto, Begona; Miguel Á., Malo
  8. Life Transitions and Food Choice Behavior in Older Adults: How Changes in Social Relationships are Linked to Changes in Brand Preferences By Reitmeier, Martina; Roosen, Jutta
  9. Why is Old Workers’ Labor Market more Volatile? Unemployment Fluctuations over the Life-Cycle By Jean-Olivier Hairault; François Langot; Thepthida Sopraseuth
  10. Population Aging, Policy Reforms, and Lifetime Net Tax Rate in Japan: A Generational Accounting Approach By Shimasawa, Manabu; Oguro, Kazumasa; Masujima, Minoru
  11. Elder care and the employment intentions of mature age women By Siobhan Austen; Rachel Ong; Therese Jefferson; Rhonda Sharp; Gill Lewin

  1. By: Per Johansson; Lisa Laun; Mårten Palme
    Abstract: We study how economic incentives affect labor force exit through different income security programs, old-age pensions as well as income taxes in Sweden. We use the option value for staying in the labor force as a measure of economic incentives and estimate an econometric model for the choice of leaving the labor market. Besides old-age pension, we focus on the Disability Insurance (DI), which is the most important exit path before age 65. By simulating the effect of different probabilities to be admitted DI we show how changes in the stringency of DI admittance affects labor supply among older workers through economic incentives.
    JEL: J14 J26
    Date: 2014–05
  2. By: Sergi Jiménez-Martín
    Abstract: The minimum pension program is one of the key welfare programs in many developing and developed countries and a key influence in retirement of low income workers or workers with intermittent working careers. The main purpose of minimum benefits programs is to guarantee a minimum standard of living after retirement. In general minimum contributory pensions that are only made available after the normal retirement age have little (but size- able) incentives effect in at least low incomer workers. Alternatively minimum contributory benefits made available at the early retirement age can generate substantial incentive effects on transitions to retirement of employed and unemployed workers. The importance of this effect critically depends upon both the eligibility conditions and the generosity of the mini- mum pension, that is, in the relationship between the guaranteed minimum pension and the average or the minimum wage.
    Date: 2014–05
  3. By: Philippe Choné (Centre de Recherche en Économie et Statistique); Guy Laroque (Centre de Recherche en Économie et Statistique)
    Abstract: This article aims at understanding the interplay between pension schemes and tax instruments. The model features extensive labor supply in a stationary environment with overlapping generations and perfect financial markets. Compared with the reference case of a pure taxation economy, we find that taxes become more redistributive when the pension instrument is available, while pensions provide incentives to work.
    Date: 2014–06
  4. By: Jaco Zuijderduijn
    Abstract: The cost of retirement has a strong impact on social processes. We study the prices individuals in Holland paid for corrodies: contracts providing elderly lifelong accommodation and care in hospitals. Around 1500 corrodies were relatively inexpensive, and within reach of those people able to raise the equivalent of c. 250 day wages of a skilled labourer if they wished to stay in a nursing hall and c. 500 day wages if they preferred an apartment of their own. In later centuries the real costs of retiring at least doubled. We argue that in the late Middle Ages spending old age in a retirement home was open to a relatively large part of the population, and that access to this type of care declined in the centuries that followed. We claim the later Middle Ages were a ‘golden age for the pensioner’ and discuss this finding in terms of the development of family ties.
    Keywords: corrodies, Holland, pre-industrial period
    Date: 2014–05
  5. By: Courtney Coile; Kevin S. Milligan; David A. Wise
    Abstract: This is the introduction and summary to the sixth phase of an ongoing project on Social Security Programs and Retirement Around the World. The first phase described the retirement incentives inherent in plan provisions and documented the strong relationship across countries between social security incentives to retire and the proportion of older persons out of the labor force. The second phase documented the large effects that changing plan provisions would have on the labor force participation of older workers. The third phase demonstrated the consequent fiscal implications that extending labor force participation would have on net program costs—reducing government social security benefit payments and increasing government tax revenues. The fourth phase presented analyses of the relationship between the labor force participation of older persons and the labor force participation of younger persons in twelve countries. We found no evidence that increasing the employment of older persons will reduce the employment opportunities of youth and no evidence that increasing the employment of older persons will increase the unemployment of youth. The fifth phase on “Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms” was intended to set the stage for this current phase. This sixth phase of the ongoing ISS project is particularly related to the fifth phase (Wise, 2012) and the second phase (Gruber and Wise, 2004) of the project. This volume continues the focus of the previous volume on DI programs while extending the methodology to study retirement behavior used in the second phase to focus in particular on the effects of the DI programs. The key question this volume seeks to address is: given health status, to what extent are differences in labor force participation across countries determined by the provisions of disability insurance programs?
    JEL: H31 H55 I19 J14 J26
    Date: 2014–05
  6. By: Eibhlin Hudson (Trinity College Dublin); David Madden (University College Dublin); Irene Mosca (Trinity College Dublin)
    Abstract: Smoking, low physical activity and frequent alcohol consumption may have substantial health risks in terms of disease, quality of life and mortality. Understanding inequality in relation to these behaviours among older people is important in the context of a rapidly ageing population. In this study, we examine income-related inequality in relation to these three key health behaviours using data on older adults from both the Republic of Ireland and Northern Ireland. We employ concentration indices and decompose them to determine the factors which contribute most to inequality. We then examine whether differences exist between the two regions. We find that smoking and low physical activity are more concentrated among those with lower incomes in both regions. In relation to physical activity, the magnitude of the inequality is higher for Northern Ireland. Frequent alcohol consumption is more concentrated among those with higher incomes in both regions. Self-assessed health and age tend to feature prominently for all behaviours in terms of contribution to inequality. Marital status and labour market status tend to play a less pronounced role. In terms of Northern Ireland/Republic of Ireland comparisons with respect to the decompositions, probably the biggest difference is to be observed in the greater role accorded to labour market status in the Republic. For the other factors, the orders of magnitude are reasonably similar. This suggests that in many cases it may be the same underlying factors which lie behind income related inequalities.
    Keywords: inequality; health behaviours; older adults; Republic of Ireland; Northern Ireland
    JEL: I14 J14
    Date: 2014–02–18
  7. By: Cueto, Begona; Miguel Á., Malo
    Abstract: In this article, we estimate the total earnings losses of male workers with a partial disability, i.e., they are able to work in a different occupation after disability onset. We use a Spanish administrative dataset (Muestra Continua de Vidas Laborales) from a specific partial disability pension scheme (Incapacidad Permanente Total). Using propensity score estimators combined with difference-in-differences, the estimation of the causal effect of the disability onset shows earnings losses to be approximately €400 per month for the first two years. For male workers over 54, total earnings losses are greater even though they receive greater benefits.
    Keywords: disability pensions; earnings losses; older workers.
    JEL: H24 H55 J14
    Date: 2014–05
  8. By: Reitmeier, Martina; Roosen, Jutta
    Abstract: Despite their growing economic influence, older consumers are often neglected as a target group because they are considered brand loyal and not flexible in their consumption habits. However, previous research suggests that life transitions may be associated with changes in older consumers’ behavior. To investigate whether late-life transitions predict a greater likelihood of changing food related brand preferences, we conducted two studies, examining four focus groups (preliminary study) and analyzing real purchase data of German consumers from 2004 to 2008 (main study). Our findings provide empirical evidence that life transitions (e.g., transition to retirement) increase the likelihood of changes in food-related brand preferences for older consumers. These findings have implications for policy makers and marketing practitioners.
    Keywords: Health Economics and Policy, Institutional and Behavioral Economics,
    Date: 2014
  9. By: Jean-Olivier Hairault; François Langot; Thepthida Sopraseuth
    Date: 2014
  10. By: Shimasawa, Manabu; Oguro, Kazumasa; Masujima, Minoru
    Abstract: We employed the Generational Accounting model in estimating the generation-specific lifetime (both past and the future) benefits/burdens and income and evaluating their values as of 2010, thus estimating the lifetime net burden ratio (= lifetime net burden/lifetime income). As a result, the following points were elucidated: 1) Among the current living generations, the lifetime net burden ratio of the 0-year-old generation is about 25 percentage points higher than that of the current 90-year-old generation; 2) The lifetime net burden ratio of the future generations is about 31 percentage points higher than that of the 0-year-old generation; 3) The net burden of the current generations would have to be increased in order to narrow the generational gap between the current generations and the future generations, which would inevitably lead to an expansion of the intragenerational gap of the current generations; and 4) In order to prevent conflict of interest between the current generations, in particular the younger generations and future generations, and at the same time, narrow the intergenerational gap, it is desirable to increase the income of the current generations, in particular that of the younger generations, by achieving a high economic growth rate and implementing macroeconomic policy management that would inhibit increase in the risk premium included in the interest rate.
    Keywords: Generational Accounting, falling birthrates and aging population, fiscal sustainability, government debt
    JEL: H61 E62 B41
    Date: 2014–05
  11. By: Siobhan Austen (School of Economics and Finance, Curtin University); Rachel Ong (School of Economics and Finance, Curtin University); Therese Jefferson (Curtin Graduate School of Business, Curtin University); Rhonda Sharp (Division of Education, Arts and Social Sciences, University of South Australia); Gill Lewin (School of Nursing and Midwifery, Curtin University)
    Date: 2013–12

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