nep-age New Economics Papers
on Economics of Ageing
Issue of 2014‒09‒05
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes By Jan Hagemejer; Marcin Bielecki; Karolina Goraus; Joanna Tyrowicz
  2. The power of elderly consumers – how demographic change affects the economy through private household demand in Germany By Britta Stoever
  3. Population Aging in the Interdependent Global Economy: A Computational Approach with an Overlapping Generations Model of Global Trade By Kazuhiko Oyamada; Ken Itakura
  4. Financial Literacy and Retirement Planning in Canada By David Boisclair; Annamaria Lusardi; Pierre-Carl Michaud
  5. A Long-run Macroeconomic Model of the Slovak Republic (Long-term sustainability of the pension system) By Tomáš Domonkos; Štefan Domonkos; Miroslava Jánošová; Filip Ostrihoň
  6. Kyrgyz Republic Public Expenditure Review Policy Notes : Pensions By World Bank
  7. Population Ageing and Technological Change By Robert E. Wright; Jouko Kinnunen; Katerina Lisenkova; Marcel Merette
  8. Koncepcja solidarności pokoleń w krajowej polityce społecznej By Klimczuk, Andrzej
  9. Effects of demographic changes on hospital workforce in European countries By Marek Radvansky
  10. Can Ageing North Benefit from Expanding Trade with South? By Marcel Mérette; Patrick Georges; Katerina Lisenkova

  1. By: Jan Hagemejer; Marcin Bielecki; Karolina Goraus; Joanna Tyrowicz
    Abstract: See full paper See full paper See full paper
    Keywords: Poland, General equilibrium modeling, Public finance
    Date: 2014–07–03
  2. By: Britta Stoever
    Abstract: Demographic change challenges the economy in many ways. The impact on pension systems, health care, labour force etc. has already been widely analysed. An ageing population directly increases the number of retired persons, the need for nursing places and the contribution rates for social security systems for example. It also indirectly influences the production structure by shifts in the composition of final demand through changes in consumer behaviour. The objective of this paper is to quantify the impact of age specific consumer behaviour and demographic change on production, labour market and GDP components. Earlier research led to consumption functions for 13 different consumption purposes depending on the age structure of the German population (as presented at EcoMod 2012). These are implemented in the macro-econometric input-output model INFORGE (INterindustry FORecasting Germany) developed by GWS. The model has been used for economic forecasts and simulation or scenario analysis in many projects and studies. Amongst other features it is characterised by a high disaggregated sector information provided by National Accounts data and input-output tables. Demand and supply side are equally modelled taking the interacting relationship between production sectors and private household demand as well as price effects into account. Overall, the model structure gives the opportunity to trace impact and linkages of changes in the structure of private household demand on production and other parts of the economy. Two different scenarios are calculated and compared in order to quantify the impact of age induced changes in demand. In the first scenario it is assumed that the population composition does not change, i.e. the shares of the single age groups stay the same over the projection period. The results will be used as baseline. The second scenario includes the future population composition given by the population projection of the Federal Statistical Office. Due to demographic change shares of older age groups increase. Comparing both scenarios, consequences of an ageing population for production and service sectors, the labour market, GDP and its components can be identified. Demographic change induces changes in private household consumption expenditures via age specific consumer behaviour. This will affect the structure of final demand and hence the goods and services that have to be provided. Consequently the structure and amount of intermediate products alters as well. The lower demand for food and beverages by elderly as the share of elderly in the population rises for example will not only reduce the necessary output of the sector manufacture of food products and beverages but also the output of the agriculture and wholesale trade sectors that are main providers of intermediate products for manufacture of food products and beverages. As result it is expected that service sectors (especially household related health services) gain importance. Services are characterised by a comparably small amount of imported intermediate inputs, lower wages and salaries per employee and higher gross value added per sector. The amount of imported goods should decline: Industries are the main importing sectors and their output will reduce relative to services.
    Keywords: Germany, Macroeconometric modeling, Impact and scenario analysis
    Date: 2013–06–21
  3. By: Kazuhiko Oyamada; Ken Itakura
    Abstract: Since the latter half of 1990s, it has been discussed that many developing countries are going to face serious population aging problem while these economies are still underdeveloped and not adequately prepared against aging yet in terms of institutional reform such as social security. As the global interdependence of national economies has been deepened, a socio-economic problem in one country comes to have significant influences on many other economies and its effect might spillover around the world. The main objectives of our study are to analyze: (1) patterns of interregional spillovers of demographic change; (2) effects of pension reforms in one country on the other countries; and (3) role of foreign aid to the developing region where fund for investment is insufficient compared to their labor supply because of the immature capital market, with special emphasis on trade and capital flows among regions. This study presents a basic analysis on interregional cooperative framework which may offset negative effects of population aging and make it possible to take advantage of the so-called "population dividends" that are derived from the population structure with a large size of working population relative to the number of dependent population. A country under faster aging process would become a capital exporter to other countries at relatively moderate aging stage. As capital export would undermine assets over the long run, it would be possible for the faster aging country to eventually become a capital importer. Using a numerical Overlapping Generations (OLG) model that includes five regions with different demographic structure (high-income countries, Japan, mainland China, other Asia, and other low-income countries), we conduct simulation analysis to examine effects of (a) pension reforms, such as increase of contribution rate, decrease of replacement rate, and raising of pension age, respectively implemented in high-income countries and/or Japan; (b) foreign aid from high-income countries and/or Japan to other Asia and/or low-income countries; and (c) complementary trade-related measures such as Free Trade Agreement (FTA) in Asian region, on the patterns of interregional trade, capital flows, regional savings and economic growth. The simulation results revealed that, as previous works suggested, interregional capital movements between regions may play a significant role to moderate the impact of population aging and pension reforms. When contribution rate is increased in a pay-as-you-go pension system, its effect becomes just like the case of a tax increase. Savings may decrease so that the capital accumulation slows down, and consumption also may shrink. Relatively higher interest rate because of the scarce capital stock may induce foreign capital inflows and relax the decrease of consumption through growth effects. Finally, removing distortions induced by trade barriers would promote interregional adjustment in resource and capital allocations.
    Keywords: Japan, mainland China, and other Asian countries, General equilibrium modeling, Agricultural issues
    Date: 2013–06–21
  4. By: David Boisclair; Annamaria Lusardi; Pierre-Carl Michaud
    Abstract: Financial literacy and Canadians’ capacity to plan for retirement is of primary importance for the policy debate over pension system reform in Canada. In this paper, we draw on internationally comparable survey evidence on financial literacy and retirement planning in Canada to investigate how financially literate Canadians are and who does plan for retirement. We find that 42 percent of respondents are able to correctly answer three simple questions measuring knowledge of interest compounding, inflation, and risk diversification. This is consistent with evidence from other countries, and Canadians perform relatively well in comparison to Americans but worse than individuals in other countries, such as Germany. Among Canadian respondents, the young and the old, women, minorities, and those with lower educational attainment do worse, a pattern that has been consistently found in other countries as well. Retirement planning is strongly associated with financial literacy; those who responded correctly to all three financial literacy questions are 10 percentage points more likely to have retirement savings.
    Keywords: Financial literacy, retirement planning, international comparisons.,
    Date: 2014–07–01
  5. By: Tomáš Domonkos; Štefan Domonkos; Miroslava Jánošová; Filip Ostrihoň
    Abstract: Using a complex long-run growth model, this paper investigates the long-term sustainability of the pension system in the Slovak Republic. The long-run growth model employed in the paper is able to perform projections for several decades ahead, which is necessary for this type of analysis. The model is composed of seven interrelated blocks. Special attention is dedicated to the labour market, social security and public sector. Instead of econometric estimations, the parameters are calibrated in accordance with economic theory. As an empirical application, we assess the long-term sustainability of the Slovak multi-pillar pension system in its latest form. Subsequently, we compare the economic effects of various hypothetical amendments to the existing social security legislation in the Slovak Republic.
    Keywords: Slovak Republic, Public finance, Impact and scenario analysis
    Date: 2014–07–03
  6. By: World Bank
    Keywords: Finance and Financial Sector Development - Debt Markets Health, Nutrition and Population - Population Policies Gender - Gender and Law Pensions and Retirement Systems Private Sector Development - Emerging Markets Social Protections and Labor
    Date: 2014–05
  7. By: Robert E. Wright; Jouko Kinnunen; Katerina Lisenkova; Marcel Merette
    Abstract: To model the economics impacts of population ageing in high-income countrie by estimating the scale of required technological change. Presentation of a over-lapping generations computable general equilibrium model. Population ageing is associated with low growth and large welfare losses. The scale of technological change needed to compensate for this is very large in historical terms.
    Keywords: Calibration is for Scotland. , General equilibrium modeling, Macroeconometric modeling
    Date: 2014–07–03
  8. By: Klimczuk, Andrzej
    Abstract: Artykuł omawia główne cechy koncepcji "solidarności pokoleń". Podejście to jest wykorzystywane w analizach dotyczących procesu starzenia się społeczeństw na początku XXI wieku oraz w projektowaniu polityki publicznej. Opracowanie przybliża podstawowe znaczenia pojęć dotyczących pokolenia i relacji międzypokoleniowych. Zwrócono uwagę, iż solidarność pokoleń stanowi kwestię socjalną wymagającą wspólnych interwencji podmiotów publicznych, komercyjnych i pozarządowych. Praca prezentuje też wnioski z krytycznej analizy założeń działań na rzecz solidarności pokoleniowej zaprezentowanych w wybranych dokumentach projektu cywilizacyjnego "Polska 2030. Trzecia fala nowoczesności". ** The article discusses the main features of "solidarity of generations" concept. This approach is used in the analysis of the ageing process at the beginning of the XXI century as well as in designing of public policy. Essay introduces the basic concepts of generations and relationships between generations meaning. Article emphasizes that solidarity between generations is a social issue that requires the combined intervention of public, commercial and non-commercial bodies. Paper presents a conclusions from critical analysis of assumptions for the solidarity of generations included in the selected documents of civilizational project "Poland 2030. The Third Wave of Modernity."
    Keywords: perspektywa cyklu życia; polityka społeczna wobec starości i ludzi starych; "srebrna gospodarka"; relacje międzypokoleniowe; zarządzanie strategiczne; life-cycle perspective; social policy towards ageing and older people; "silver economy"; intergenerational relationships; strategic management
    JEL: J14 J18 Z13
    Date: 2013
  9. By: Marek Radvansky
    Abstract: Demographic trends and ageing are one of the main factors influencing future trends in the socio-economic development of all European countries included in significant changes in labour market structure. This paper analyse the influence of demographic changes on health care demand based on utilization method and its direct influence on increasing demand for health workforce. The used methodology is based on previous work (Schultz, 2012) and (Schultz et al., 2013) and is based on different utilization in relation to age group. Main driver of expected changes in demand and utilization is represented by demographic scenario projections (Europop). Presented cross-country comparison shows, that despite the similar demographic trends in all European countries, the situation in health care demand, especially length of stay and number of discharges (incl. trends) is significantly different, but generally leads to increase of expected labour force at healthcare sector. Cluster analysis shows four/five different groups of countries in relation to statust and current development of hospital demand. Further development of expected hospital utilization is based on rather simple time series analysis. On the other side, the main purpose of this paper is present the broader overview of possible labour force shortages in specific sector of employment. Indirectly, via relation of workforce to expenditures, we are able to roughly estimate also effect on real healthcare expenditures. We were unable to incorporate all EU countries in this study due to incomplete data sources. Results of this study are relevant to policy and education planning. See above. Paper presents brief analysis of expected employment in hospital sector in 2025. We will provide estimation of four scenarios, two of them will be related to population forecast and rest of them to change of utilization patterns in hospital care services. Initial analysis shows, that uncertainty about future demand for health care is pretty high and can be affected by many different factors. Current decreasing trends in average length of stay couldn’t be kept in long term, thus some constraints have been adopted. Countries overview has two main conclusions. Firstly, the utilization trends across countries are different and cluster analysis provide information, that we can find 5 groups, which best fits similar trends. Secondly, the age distribution of hospital care remains more stable over time and we couldn’t find significant crossborder influence. Therefore, the trends are distributed rather proportionally. In average in most of the countries we can expect a moderate growth in demand for hospital workforce. Additionally, we have been able to provide information about pure influence of ageing on labour demand. In that case, the differences in population development play significantly lower role than utilization patterns. Generally we can say, that in relation to static scenario (without significant changes in utilization) substantial growth of labour demand can be expected almost in all countries. In dynamic scenario with typically decreasing trend in needs for hospital care only one third of observed countries shows expected increase of demand for hospital care (incl. Germany). We should keep in mind, that only additional demand is analyzed. (Schultz, 2013(a)) shows, that average age of medical and nursing personell is in average over 50, and we can expect also significant role (in some countries even the most significant) of replacement demand in total demand for health care workforce.
    Keywords: Panel of European countries with sufficient data (around 20) , Labor market issues, Impact and scenario analysis
    Date: 2014–07–03
  10. By: Marcel Mérette; Patrick Georges; Katerina Lisenkova
    Abstract: In this paper we estimate the benefit for the ageing North countries of diversifying some of its trade away from the other North countries in favour of the South countries. To this end we use a six-region overlapping generations model that takes into account the demographic trends of the 21st century and trade patterns. We show that ageing Northern countries can benefit from “enriching decay” through significant improvement in the terms of trade. We estimate to what extent the enriching decay can be bolstered if the North expands trade with the South. In Europe, for instance, appropriate trade diversification strategy may prop up Europe’s real per capita consumption by 3%. See above See above
    Keywords: North Countries - South Countries, Trade issues, General equilibrium modeling
    Date: 2013–06–21

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