nep-age New Economics Papers
on Economics of Ageing
Issue of 2014‒06‒28
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Rates of return and early retirement disincentives: Evidence from a German pension reform By Lüthen, Holger
  2. The Effects of a Non-Contributory Pension Program on Labor Force Participation: The Case of 70 y Más in Mexico By Laura Juárez González; Tobias Pfutze
  3. Labour Force Participation among Older New Zealanders, 1991-2013 By Michael P. Cameron
  4. Early retirement and cognitive decline. A longitudinal analysis using SHARE data By Martina Celidoni; Chiara Dal Bianco; Guglielmo Weber
  5. Health, Disability Insurance and Retirement in Denmark By Paul Bingley; Nabanita Datta Gupta; Michael Jorgensen; Peder Pedersen
  6. Workforce Aging and the Labour Market Opportunities of Youth: Evidence from Canada By Dhanjal, Sundip; Schirle , Tammy
  7. The Analysis of Population Aging Phenomena in Poland in Spatial Perspective By Justyna Wilk, Michal Bernard Pietrzak
  8. Old-Age Government Transfers and the Crowding Out of Private Gifts: The 70 and Above Program for the Rural Elderly in Mexico By Catalina Amuedo Dorantes; Laura Juárez González
  9. Living Arrangements in Europe: Whether and Why Paternal Retirement Matters By Luca Stella
  10. Workforce ageing and the training propensity of Italian firms: cross-sectional evidence from the INDACO survey By Guerrazzi, Marco
  11. A behavioural analysis of the diet-health relationship in the older Italian population By Mazzocchi, Mario; Irz, Xavier; Modugno, Lucia; Traill, W Bruce

  1. By: Lüthen, Holger
    Abstract: To counteract the financial pressure emerging in aging societies, statutory pay-as-you-go pension schemes are undergoing fundamental reforms in many Western countries. Starting with cohort 1937, Germany introduced permanent pension deductions for early retirement. This paper examines the evolution of the profitability of pension contributions against the background of this reform for cohorts 1935-1945. I measure the profitability with the internal rate of return (IRR) and use high quality administrative data. For men the IRR declines from 2.4% to 1.2% and for women from 5.2% to 3.7%. The results suggest that the deductions introduced by the reform only cause some part of this trend. The majority of the trend, about 75%-80%, is caused by increased pension contributions. --
    Keywords: pensions,reform,early retirement,disincentives,pay-as-you-go,rates of return,Germany
    JEL: D02 D04 D14 D91 H55
    Date: 2014
  2. By: Laura Juárez González; Tobias Pfutze
    Abstract: We estimate the effect of 70 y Mas, an age-conditioned transfer program for individuals age 70 and older in rural Mexico, on the labor force participation of beneficiaries and of younger individuals who live with them. Using data from the 2010 Mexican Census, we exploit the age and locality population thresholds to identify the effects of the program. We find that the program reduces the labor force participation of elderly men, particularly of those who live alone and who are relatively poor, but has a much weaker effect on that of elderly women. The program has no statistically significant effect on the labor force participation of either prime-age men or women who live with potential beneficiaries, and it has a negative and significant effect on the labor force participation of boys age 12 to 17, particularly those in the lowest wealth quintiles, but not on that of same-age girls. These results suggest that the program affects mostly the labor supply of the intended beneficiaries, and that of marginal workers, like adolescent boys.
    Keywords: Pensions, Social Protection, Labor Force Participation, Mexico.
    JEL: D04 J26 O12
    Date: 2014–06
  3. By: Michael P. Cameron (University of Waikato)
    Abstract: WNew Zealand’s population is ageing rapidly and alongside this the labour force is also ageing. This paper presents a descriptive analysis of the labour force and employment trends among older New Zealanders (that is, those aged 55 and over). Specifically, the paper focuses on labour force participation by age-group, by cohort and by region, and employment by industry and by occupation. I find that the older labour force is large and growing over time, and the patterns are similar by gender and by region. Employment of older workers is more concentrated in agriculture than other industries or occupations. Cohort analysis reveals that generational differences in labour force participation rates are a significant driver of increases in the older labour force, but that cohort differences do not explain increases in the proportion of full-time employment among older workers to the same extent.
    Keywords: labour force participation; older people; New Zealand
    JEL: J21 J26
    Date: 2014–06–21
  4. By: Martina Celidoni (University of Padova); Chiara Dal Bianco (University of Venezia); Guglielmo Weber (University of Padova)
    Abstract: We use a new measure of cognitive decline that is highly predictive of the onset of dementia and can be computed in standard surveys where recall memory tests are administered to the same individuals over the years. Using SHARE data, we investigate the association between cognitive decline and years in retirement controlling for age, physical health, early life conditions and socio-economic status. We find a positive association and an even stronger causal effect. The evidence we produce confirms the Ômental retirementÕ hypothesis and suggests its relevance for the onset of dementia.
    Keywords: Ageing, cognition, retirement, instrumental variable estimation. Classification-JEL: I12, I1, J26.
    Date: 2013–12
  5. By: Paul Bingley; Nabanita Datta Gupta; Michael Jorgensen; Peder Pedersen
    Abstract: There are large differences in labor force participation rates by health status. We examine to what extent these differences are determined by the provisions of Disability Insurance and other pension programs. Using administrative data for Denmark we find that those in worse health and with less schooling are more likely to receive DI. The gradient of DI participation across health quintiles is almost twice as steep as for schooling – moving from having no high school diploma to college completion. Using an option value model that accounts for different pathways to retirement, applied to a period spanning a major pension reform, we find that pension program incentives in general are important determinants of retirement age. Individuals in poor health and with low schooling are significantly more responsive to economic incentives than those who are in better health and with more schooling. Similar gradients in outcomes and behavior by health and schooling partially reflects the less educated having poorer health on average, but also that the less educated have worse job prospects and higher replacement rates due to a progressive formula for DI and other pension benefits.
    JEL: H55 I1 J14
    Date: 2014–05
  6. By: Dhanjal, Sundip; Schirle , Tammy
    Abstract: In this study, we investigate whether an aging workforce affects the job opportunities of youth. Provincial data from the 1976-2013 Labour Force Surveys and a fixed-effects model is used to estimate the effect of the share of the adult male labour force that is aged 55 to 69 on the employment and unemployment rates of men aged 25 to 29. We estimate effects on other labour market outcomes including wages and school enrolment, and other samples of younger men and women. There is no evidence to suggest that a growing share of older workers negatively affects the decisions or outcomes of youth in the labour market. To the contrary, there is weak evidence to suggest an aging population has a positive effect on the labour market outcomes of youth.
    Keywords: Population aging, employment, unemployment, youth
    JEL: J11 J21
    Date: 2014–06–16
  7. By: Justyna Wilk, Michal Bernard Pietrzak (Wroc³aw University of Economics, Nicolaus Copernicus University, Poland)
    Abstract: The processes of socio-economic development are continuously accompanied by the process of population aging. It is seen as a growing of the percentage share of people aged 65 and over in the general population. It covers the majority of European Union countries and also refers to Poland. The objective of the paper is to analyze the population aging phenomenon in spatial perspective. The study was carried out for 66 subregions (NUTS 3) and covered the period 1995-2012. Poland is characterized by a strong spatial diversification regarding the senior citizens share and its growth rate, and also determinants exerting impact on the demographic aging processes. The demographically youngest and slowest aging population lives in south-eastern and also central Poland. The most intensive population aging processes are seen in the selected subregions of south-western Poland. Here, we observe extremely low fertility, demographically old working-age population and also significant migration outflow of younger people.
    Keywords: population aging, socio-economic development, spatial approach, taxonomic analysis, regression analysis
    JEL: C38 C51 J11
    Date: 2014–03
  8. By: Catalina Amuedo Dorantes; Laura Juárez González
    Abstract: This paper estimates the crowding out of private transfers caused by 70 y Más -a public assistance program for rural elderly adults in Mexico, for whom family support is an important source of income. Using data from the National Household Income and Expenditure Survey and a triple-difference estimation, we find that the program crowds out private transfers by 37 percent, and it does so mainly by reducing the probability of receiving domestic remittances. As a result, the non-labor income of beneficiaries increases by less than their government transfers. Thus, by reducing their private support to elderly adults, domestic donors are dampening the effect of the program, although not completely neutralizing it.
    Keywords: Old-age government transfers, crowding-out, remittances, Mexico
    JEL: H3 H55 J14 J18
    Date: 2013–11
  9. By: Luca Stella (University of Padova)
    Abstract: This paper uses retrospective micro data from eleven European countries to investigate the role of paternal retirement in explaining children's decisions to leave the parental home. To assess causality, I use a bivariate discrete-time hazard model with shared frailty and exploit over time and cross-country variation in early retirement legislation. Overall, the results indicate a positive and significant influence of paternal retirement on the probability of first nest-leaving of children residing in Southern European countries, both for sons and daughters. By contrast, there is no evidence of significant effects on children living in Northern and Central European countries. I then discuss and test empirically the potential mechanisms by which paternal retirement may affect children's nest-leaving. My results suggest that the increase in children's nest-leaving around paternal retirement does not appear to be justified by changes in parental resources or in the supply of informal child care provided by grandparents. Rather, one must probably look for channels involving home characteristics or negative externalities in preferences between parents and children.
    Keywords: Living Arrangements, Retirement, SHARE.
    JEL: J13 J26
    Date: 2014–02
  10. By: Guerrazzi, Marco
    Abstract: In this paper, I provide a probit analysis in which the propensity of private Italian firms to offer on-the-job training is linked to the age and the gender of the employed workforce as well as to a set of relevant corporate characteristics such as size, sector, geographical location, innovation strategies, R&D investments and the use of social safety valves. Retrieving cross-sectional data from INDACO 2009, I find that the propensity of surveyed firms towards training provision follows an inverted u-shaped pattern with respect to the average age of incumbent workers. Furthermore, I show that larger firms are more willing to offer training and the same attitude holds for productive units that adopted innovation strategies and/or invested in R&D projects. By contrast, I find that the propensity to support training activities is negatively correlated to the percentage of employed women and the use of social valves.
    Keywords: Ageing; Older workers; Vocational training; Human capital; Labour turnover; Probit model; INDACO.
    JEL: J14 J24
    Date: 2014–06–20
  11. By: Mazzocchi, Mario; Irz, Xavier; Modugno, Lucia; Traill, W Bruce
    Abstract: The continuous aging of the EU population poses important challenges to the sustainability of welfare states. Part of the solution is to ensure that people not only live longer but also better (i.e., can function independently while remaining free of disease and disability), which may be achieved through better nutrition. In order to test that proposition, we develop a behavioural model of diet quality choice and health determination. The simultaneous equation model, which accounts for the endogeneity of dietary and other lifestyle choices, is applied to a sample of older people from Italy and allows for the possibility of bi-directional causality between diet and health.
    Keywords: Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Institutional and Behavioral Economics, International Relations/Trade,
    Date: 2014–04

This nep-age issue is ©2014 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.