nep-age New Economics Papers
on Economics of Ageing
Issue of 2014‒07‒05
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Rates of Return and Early Retirement Disincentives: Evidence from a German Pension Reform By Holger Lüthen
  2. Understanding the Effect of Retirement on Health Using Regression Discontinuity Design By Peter Eibich
  3. Looking Back in Anger?: Retirement and Unemployment Scarring By Clemens Hetschko; Andreas Knabe; Ronnie Schöb
  4. Did the Economic Crisis have Impacts on the Health and Well-being of Ireland's Older People? By Barrett, Alan; O'Sullivan, Vincent
  5. Medicaid and the Elderly By Mariacristina De Nardi; Eric French; John Bailey Jones
  6. Lifting the Burden: State Care of the Elderly and Labor Supply of Adult Children By Løken, Katrine V.; Lundberg, Shelly; Riise, Julie
  7. A Survey-based Analysis of Irish Savings Behaviour by Age By Timoney, Kevin

  1. By: Holger Lüthen
    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: Peter Eibich
    Abstract: This paper estimates the causal effect of retirement on health, health behavior, and healthcare utilization. Using Regression Discontinuity Design to exploit financial incentives in the German pension system for identification, I investigate a wide range of health behaviors (e.g. alcohol and tobacco consumption, physical activity, diet and sleep) as potential mechanisms. The results show a long-run improvement in health upon retirement. Relief from work-related stress and strain, increased sleep duration and more frequent physical exercise seem to be key mechanisms through which retirement affects health. Moreover, the improvement in health caused by retirement leads to a reduction in healthcare utilization.
    Keywords: retirement, health, regression discontinuity design, health behavior, healthcare
    JEL: I12 J14 J26
    Date: 2014
  3. By: Clemens Hetschko; Andreas Knabe; Ronnie Schöb
    Abstract: Previous studies find that past unemployment reduces life satisfaction even after reemployment for non-monetary reasons (unemployment scarring). It is not clear, however, whether this scarring is only caused by employment-related factors, such as worsened working conditions, or increased future uncertainty as regards income and employment. Using German panel data, we identify non-employment-related scarring by examining the transition of unemployed people to retirement as a life event after which employment-related scarring does not matter anymore. We find evidence for non-employment-related non-monetary unemployment scarring for people who were unemployed for the first time in their life directly prior to retirement, but not for people with earlier unemployment experiences.
    Keywords: Unemployment scarring, life satisfaction, retirement
    JEL: I31 J26
    Date: 2014
  4. By: Barrett, Alan; O'Sullivan, Vincent
    Keywords: crisis/impacts/Ireland/older
    Date: 2014–04
  5. By: Mariacristina De Nardi; Eric French; John Bailey Jones
    Abstract: The brief’s key findings are: *Medicaid covers not only the low-income elderly but also those with higher incomes who become impoverished by health costs, such as nursing home care. *The percentage of high-income single retirees receiving Medicaid rises with age – from near zero for those in their 70s to 20 percent for those in their late 90s. *Even higher-income retirees who never receive Medicaid benefit from the insurance value that it provides, which allows them to maintain smaller reserves. *The analysis suggests that single retirees of all incomes value current Medicaid benefits at more than their cost but an expansion at less than its cost.
    Date: 2014–06
  6. By: Løken, Katrine V. (Department of Economics, University of Bergen); Lundberg, Shelly (Department of Economics, University of California, Santa Barbara); Riise, Julie (Department of Economics, University of Bergen)
    Abstract: In this paper, we use a 1998 reform in the federal funding of local home-based care for the elderly in Norway to examine the effects of formal care expansion on the labor supply decisions and mobility of middle-aged children. Our main finding is a consistent and signi cant negative impact of formal care expansion on work absences longer than 2 weeks for the adult daughters of single elderly parents. This effect is particularly strong for daughters with no siblings, and this group is also more likely to exceed earnings thresholds after the reform. We find no impacts of the reform on daughter's mobility or parental health, and no effects on adult sons. Our results provide evidence of substitution between formal home-based care and informal care for the group that is most likely to respond to the parent's need for care - adult daughters with no siblings to share the burden of parental care. These results also highlight the importance of labor market institutions that provide flexibility in enabling women to balance home and work responsibilities.
    Keywords: Formal and informal care; elderly; welfare state; women's career
    JEL: J14 J22
    Date: 2014–06–24
  7. By: Timoney, Kevin
    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.