nep-age New Economics Papers
on Economics of Ageing
Issue of 2015‒01‒14
fifteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Impact of Voluntary and Involuntary Retirement on Mental Health: Evidence from Older Irish Adults By Mosca, Irene; Barrett, Alan
  2. Female Transition to Retirement By Agnieszka Ch³oñ-Domiñczak
  3. Care for Money? Mortality Improvements, Increasing Intergenerational Transfers, and Time Devoted to the Elderly By Tobias C. Vogt; Fanny A. Kluge
  4. Training and wages of older workers in Europe By Michele Belloni; Claudia Villosio
  5. How to Provide and Pay for Long-Term Care of an Aging Population is an International Concern By Marsha Gold
  6. Immigrants and Retirement Resources By Purvi Sevak Lucie Schmidt
  7. Effect of PACE on Costs, Nursing Home Admissions, and Mortality: 2006-2011 By Arkadipta Ghosh; Robert Schmitz; Randall Brown
  8. Impact of Demographic Changes on Inflation and the Macroeconomy By Jong-Won Yoon; Jinill Kim; Jungjin Lee
  9. The Implications of a graying japan for government policy By Braun, R. Anton; Joines, Douglas H.
  10. Evaluating PACE: A Review of the Literature By Arkadipta Ghosh; Cara Orfield; Robert Schmitz
  11. The impact of regulating occupational pensions in Europe on investment and financial stability By Amzallag, Adrien; Kapp, Daniel; Kok, Christoffer
  12. Job Insecurity, Employability, and Health: An Analysis for Germany across Generations By Steffen Otterbach; Alfonso Sousa-Poza
  13. Health, productivity, and ageing By Maciej Lis; Iga Magda
  14. Transitions from Medicare-Only to Medicare-Medicaid Enrollment By Rosemary Borck; Carol V. Irvin; Wilfredo Lim
  15. Minimizing the Probability of Ruin in Retirement By Christopher J. Rook

  1. By: Mosca, Irene (Trinity College Dublin); Barrett, Alan (ESRI, Dublin)
    Abstract: The few studies that have attempted to identify the causal effects of retirement on mental health and well-being have provided conflicting evidence. Hence, whether retirement affects mental health positively or negatively is still unclear. Our primary objective is to investigate the impact of retirement on mental health as measured by the 20-item Center for Epidemiological Studies Depression Scale (CES-D). We use data from the first two waves of The Irish Longitudinal Study on Ageing (TILDA). This is a nationally representative sample of individuals aged 50 and over and living in Ireland. To deal with possible endogeneity problems, we use first-differenced estimation models and control for a broad range of life events occurring between the two waves. These include transition to retirement but also demographic, social, economic and physical health events. As part of the TILDA survey, reasons for retirement are asked. We exploit this information and distinguish between individuals who retired voluntarily, involuntarily or because of own ill health. We find that involuntary, or forced, retirement has a negative and statistically significant effect on mental health. In contrast, we find no effects for voluntary retirement. We also find that retirement due to ill health is negatively associated with mental health.
    Keywords: mental health, retirement
    JEL: J26 J14
    Date: 2014–12
  2. By: Agnieszka Ch³oñ-Domiñczak
    Abstract: The European countries’ policies related to female participation in the labour market as well as approach to retirement ages have evolved in the course of the past two decades.This is the response to demographic, social and economic developments in Europe. After many decades of low and falling age of transition to retirement, women engage more in the labour market activity, and they also retire later. In this paper we look at the past and future evolution of transition from work to retirement of women. We also look at the current developments at the labour market as well as directions of changes in pension systems, from the gender equality perspective. Based on the set of labour market and pension system indicators, we propose a Pension Rights Gap Index that measures the distance to full pension rights scenario, taking into account wage levels and duration of employment as well as generosity and income redistribution mechanisms within pension systems.
    Keywords: gender, labour market, retirement
    JEL: J0 J2 J88 I3 H8
    Date: 2013–09
  3. By: Tobias C. Vogt; Fanny A. Kluge
    Abstract: Background: After the reunification of Germany, mortality among older eastern Germans converged quickly with western German levels. Simultaneously, the pension benefits of eastern Germans rose tenfold. Objective: We make use of German reunification as a natural experiment to show that, first, increasing financial transfers from the elderly to their children led to increasing reverse transfers in the form of care; and, second, this rise in the number of hours spent on care led to a reduction in old-age mortality. Method: As a first step, we calculated intergenerational transfer profiles by age for eastern and western Germany to determine whether any changes in downward and in upward transfers in the form of time and money occurred since reunification. We use generalized linear regression to test whether rising pensions led to an increase in the number of hours spent on care, and whether this increase led to a reduction in old-age mortality. We use different macro level data sources to test our hypothesis, including mortality rates and time use surveys for East and West Germany and information on private intergenerational transfers from the National Transfer Accounts project for Germany. Results: We show that since German reunification, intergenerational downward transfers more than doubled in percentage terms in the east. This was predominantly caused by the sharp increase in pension benefits since the fall of the Berlin Wall. At the same time, mortality among pensioners dropped markedly, and converged 1 to western German levels. We further show that the rise in pension income was strongly correlated with the increase in social support and the decline in mortality among older eastern Germans. Discussion: Our result suggest that there was an interfamilial monetary transfer from the elderly to the young in exchange for social support. This mutual beneficial exchange may have helped to improve the survival of older East Germans after the reunification.
    Date: 2014
  4. By: Michele Belloni (Department of Economics, University Of Venice Cà Foscari); Claudia Villosio (LABORatorio R. Revelli-Collegio Carlo Alberto)
    Abstract: The financial deficits of many social security systems caused by ageing populations and stagnating economies are forcing workers to retire later from the labour market. An extended working life combined with rapid technological progress in many sectors, is likely making older workers’ skills obtained in school obsolete. In this context, lifelong investment in training is widely recognized among the international research and policy community as a key element to increase or at least limit the decline in productivity of older workers. This paper investigates the relationship between training undertaken by European older workers and their wages, relying on the Survey of Health, Ageing and Retirement in Europe. Undertaking training activities is associated with 6.3% higher wages. This premium is sizeable and is similar to that of attaining an upper or post-secondary degree instead of a primary or lower-secondary degree. Training wage premiums are highly heterogeneous across countries: they are highest in Austria, Germany, Greece, and Italy and are about half that in France and Spain. No premium is found for Denmark, Sweden, Belgium, the Netherlands, and Switzerland. Training premiums of the first group of countries can be overestimated due to training endogeneity and sample selection bias.
    Keywords: Older workers, Training, Wages, Cognitive abilities, Sample selection bias, Attrition
    JEL: J14 J24 J31
  5. By: Marsha Gold
    Abstract: As populations age, most industrialized nations are seeking to review their long-term care programs and better allocate better limited public resources to meet expanding needs. This commentary piece examines critical questions that define the way individual nations provide for the long-term care needs of their aging populations.
    Keywords: Long-Term Care Aging Population International Health; commentary
    JEL: I
    Date: 2013–01–30
  6. By: Purvi Sevak Lucie Schmidt
    Abstract: Using data from the Health and Retirement Study linked with restricted data from the Social Security Administration, this article compares retirement resources of immigrant and native-born workers. Results suggest that although immigrants have lower levels of Social Security benefits than workers born in the United States, when holding demographic characteristics constant, immigrants have higher levels of net worth. The estimated immigrant differentials vary a great deal by number of years in the United States, with the most recent immigrants being the least prepared for retirement.
    Keywords: Health Retirement Immigrants Disability
    JEL: I J
    Date: 2014–01–01
  7. By: Arkadipta Ghosh; Robert Schmitz; Randall Brown
    Abstract: This study—examining the effects of the Program of All-Inclusive Care for the Elderly (PACE) on Medicare and Medicaid expenditures, use of nursing home services, and mortality—was conducted as part of the Center of Excellence on Disability Research project. PACE plans provide coordinated acute and long-term care services to nursing home–eligible older adults in the community. Two separate components constituted the study: (1) a comprehensive review of existing evaluations of PACE, and (2) an empirical analysis of costs and outcomes for PACE enrollees relative to a matched comparison group. This report presents findings from the empirical evaluation.
    Keywords: PACE, Program of All-Inclusive Care for the Elderly, Medicare costs, Medicaid costs, Nursing Home admissions, mortality, Mortality
    JEL: I
    Date: 2014–01–30
  8. By: Jong-Won Yoon; Jinill Kim; Jungjin Lee
    Abstract: The ongoing demographic changes will bring about a substantial shift in the size and the age composition of the population, which will have significant impact on the global economy. Despite potentially grave consequences, demographic changes usually do not take center stage in many macroeconomic policy discussions or debates. This paper illustrates how demographic variables move over time and analyzes how they influence macroeconomic variables such as economic growth, inflation, savings and investment, and fiscal balances, from an empirical perspective. Based on empirical findings—particularly regarding inflation—we discuss their implications on macroeconomic policies, including monetary policy. We also highlight the need to consider the interactions between population dynamics and macroeconomic variables in macroeconomic policy decisions.
    Keywords: Demographic transition;Inflation;Population growth;Aging;Human fertility;Mortality;Older people;Labor supply;Monetary policy;Fiscal policy;Demographic Changes, Population Aging, Inflation, Macroeconomic Impact, Savings and Investment, Monetary Policy, Fiscal Policy.
    Date: 2014–11–24
  9. By: Braun, R. Anton (Federal Reserve Bank of Atlanta); Joines, Douglas H. (University of Southern California)
    Abstract: Japan is in the midst of a demographic transition that is both rapid and large by international standards. As recently as 1990, Japan had the youngest population among the Group of 6 large, developed countries. However, the combined effects of aging of the baby boomer generation and low fertility rates have produced very rapid aging. Japan now finds itself with the oldest population among the Group of 6, and its population will continue to age at a rapid pace in future years. Aging is already placing a burden on government finances, and Japan's ability to confront the negative fiscal implications of future aging is constrained by its very high debt-to-GDP ratio. We find that Japan faces a severe fiscal crisis if remedial action is not undertaken soon, and we analyze alternative strategies for correcting Japan's fiscal imbalances.
    Keywords: Japan; fiscal policy; aging; government
    JEL: E62 H51 H55 H63
    Date: 2014–11–01
  10. By: Arkadipta Ghosh; Cara Orfield; Robert Schmitz
    Abstract: Conducted as part of the Center of Excellence in Research on Disability Services and Care Coordination and Integration project, this study examined the effects of the Program of All-Inclusive Care for the Elderly (PACE) on Medicare and Medicaid expenditures, use of nursing home services, and mortality. PACE plans provide coordinated acute and long-term care services to nursing home–eligible older adults in the community. The study included two separate components: (1) a comprehensive review of existing evaluations of PACE, and (2) an empirical analysis of costs and outcomes for PACE enrollees relative to a matched comparison group. This report presents findings from the literature review.
    Keywords: PACE, Medicare costs, Medicaid costs, hospitalizations, nursing home admissions, quality of care, mortality
    JEL: I
    Date: 2014–01–31
  11. By: Amzallag, Adrien; Kapp, Daniel; Kok, Christoffer
    Abstract: This study examines the European Commission’s 2011 call for advice to the European Insurance and Occupational Pensions Authority (EIOPA) on the improvement of the Institutions for Occupational Retirement Provision (IORP) Directive (the “IORP Directive”). Specifically, it uses both the EIOPA final advice to the Commission and its quantitative impact study as a basis for answering the following questions: first, what would be the likely impact of the changes proposed to the IORP Directive, in particular minimum solvency requirements, the introduction of risk-based solvency capital requirements, on IORP investment strategies in the short and long term? Second, what would be the impact, if any, of these proposals on financial stability, in particular as regards possible pro-cyclical IORP investment behaviour? The main findings of the study are that the proposed solvency capital requirement framework could lead to IORPs shifting their investment allocations towards a greater proportion of “low-risk” asset classes. However, the impact is likely to vary extensively across EU countries, in line with national pension legislation, demographic profiles, the macro-financial situation and cultural preferences. Nevertheless, the study finds some empirical support to suggest that even the announcement of the proposed revisions, which have in the meantime been deferred, may already have led to some de-risking of some IORPs. Furthermore, some pro-cyclicality of IORPs’ investment strategies could be expected should these proposals be adopted, although the exact outcomes will depend on their precise calibration, especially regarding counter-cyclical adjustments. JEL Classification: F41, F31, E50
    Keywords: financial regulation, financial stability, Institutions for Occupational Retirement Provision
    Date: 2014–07
  12. By: Steffen Otterbach; Alfonso Sousa-Poza
    Abstract: In this paper, we use 12 waves of the German Socio-Economic Panel to examine the relationship between job insecurity, employability and health-related well-being. Our results indicate that being unemployed has a strong negative effect on life satisfaction and health. They also, however, highlight the fact that this effect is most prominent among individuals over the age of 40. A second observation is that job insecurity is also associated with lower levels of life satisfaction and health, and this association is quite strong. This negative effect of job insecurity is, in many cases, exacerbated by poor employability.
    Keywords: Job insecurity, employment, employability, well-being, health, Germany
    JEL: J21 J22
    Date: 2014
  13. By: Maciej Lis; Iga Magda
    Abstract: We provide a comparative cross-country analysis of individual age-wage proles for different health statuses. Using semi-parametric regressions run on EU-SILC data we aim at answering the question on the relationship b etween individual health and pro ductivity and its changes in the life cycle, separating the impact of health from traditional wage determinants. We nd that although the agepro ductivity proles vary much among countries, these dierences are not inuenced by the self-p erceived health status.
    Keywords: Health, Ageing, Productivity
    JEL: I19 J24
    Date: 2014–05
  14. By: Rosemary Borck; Carol V. Irvin; Wilfredo Lim
    Abstract: We assessed transitions from Medicare-only to Medicare-Medicaid enrollment (MME) in 2009, examining variations in transition rates by age group, in use of long-term care (LTC) services, and across states.
    Keywords: Medicare, dual eligible, Medicare-Medicaid enrollment, long-term care, nursing home, state variations
    JEL: I
    Date: 2014–01–31
  15. By: Christopher J. Rook
    Abstract: Retirees who exhaust their savings while still alive are said to experience financial ruin. These savings are typically grown during the accumulation phase then spent during the retirement decumulation phase. Extensive research into invest-and-harvest decumulation strategies has been conducted, but recommendations differ markedly. This has likely been a source of concern and confusion for the retiree. Our goal is to find what has heretofore been elusive, namely an optimal decumulation strategy. Optimality implies that no alternate strategy exists or can be constructed that delivers a lower probability of ruin, given a fixed inflation-adjusted withdrawal rate.
    Date: 2015–01

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