nep-age New Economics Papers
on Economics of Ageing
Issue of 2015‒03‒27
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Measuring Active Aging for Cross-Country Comparisons and Policy Planning By Liudmila Zasimova; Maria Sheluntcova; Alexey Kalinin
  2. Crowding (out) the retirees? RDD application to raising effective retirement age in Poland By Paweł Strzelecki; Joanna Tyrowicz
  3. Reforming Old Age Security: Effects and Alternatives By Nicholas-James Clavet; Jean-Yves Duclos; Bernard Fortin; Steeve Marchand
  4. Are Retirees Falling Short? Reconciling the Conflicting Evidence By Alicia H. Munnell; Matthew S. Rutledge; Anthony Webb
  5. The Impact of Migration on Lithuanian Economy in an Ageing Society Context By Gindra Kasnauskiene; Loreta Vebraite
  6. Secular Changes in Late-Life Cognition and Well-Being: Towards a Long Bright Future with a Short Brisk Ending? By Denis Gerstorf; Gizem Hülür; Johanna Drewelies; Peter Eibich; Sandra Duezel; Ilja Demuth; Paolo Ghisletta Elisabeth Steinhagen-Thiessen; Gert G. Wagner; Ulman Lindenberger
  7. Returns and Determinants of Pension funds’ Allocation to Private Equity: Comparing Venture Capital and Leverage Buyouts. By Sandra Rigot
  8. Households' Saving and Debt in Italy By Tullio Jappelli; Immacolata Marino; Mario Padula
  9. Quality, Quantity and Duration of Lives By Jean-Yves Duclos; Bouba Housseini
  10. The Effect of Cancer on the Employment of Older Males: Attenuating Selection Bias using a High Risk Sample By David Candon
  11. Estimation of the Distribution of Remaning Life Time of the People in Turkey By Mehmet Fedai KAYA; Muslu Kazım KÖREZ; Süleyman DÜNDAR

  1. By: Liudmila Zasimova (National Research University Higher School of Economics); Maria Sheluntcova (National Research University Higher School of Economics); Alexey Kalinin (National Research University Higher School of Economics)
    Abstract: An aging population and the low involvement of elderlies in social activities makes the measurement of active aging an important research question, since it gives an insight into the potential of the elderly. Policy agendas in many countries stress the need for active aging in terms of improved health and a greater degree of autonomy. This paper aims to investigate the potential and limits of international comparison for setting policy goals concerning older adults. We use World Health Organization (WHO) micro data from the Study of Global Ageing and Adult Health (SAGE) to measure active aging in five countries demonstrating similar macroeconomic outcomes, namely Russia, India, China, South Africa and Mexico. Following the WHO concept of active aging, we select indicators for three components of active aging (health, participation in social activities, and security) and aggregate them into three sub-indices, which become the outcome index of active aging. Our findings show significant variation in the proportion of actively aging individuals in selected countries (from 89% in China to 44% in South Africa) and in the sub-indices of health, participation and security. We compare our results with macro-level data and conclude that the active aging index could be a useful tool for measuring the proportion of actively aging individuals and understanding the challenges for policy makers in each country. However, one should understand the limits of micro-level data analysis and interpret the results carefully. We also argue that for international comparisons, active aging indexes should be studied with respect to the activity of non-elderlies in each country
    Keywords: active aging, public policy, the elderly, health, participation, security
    JEL: J14 J18
    Date: 2015
  2. By: Paweł Strzelecki (Warsaw School of Economics; National Bank of Poland); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)
    Abstract: As of 2007 increased labor force participation of the elderly has been observed in Poland. In 2009 a reform in the eligibility criteria narrowed the scope of early retirement opportunities for majority of the occupations. While labor force participation in the directly affected cohorts continued to grow, but an increase already prior to the reform hints that other factors may have been at play as well. The objective of this paper is to isolate and evaluate the causal ef-fect of the changes in eligibility criteria on labor force participation and exit to retirement of the affected cohorts. We rely on Polish Labor Force Survey and employ regression disconti-nuity design to evaluate the change in participation subsequent to the eligibility reform among the treated cohorts. We find a statistically significant, but economically small discontinuity at the timing of the reform. The placebo test shows no similar effects in earlier or later quarters. Yet, the pure treatment effects are insignificant in vast majority of the specification. Our con-clusions are thus as follows: the changes in the eligibility criteria were not instrumental in fostering the participation rates among the affected cohort, i.e. the immediate contribution to increased labor force participation of these cohorts is not economically large.
    Keywords: retirement age, early retirement, regression discontinuity, Poland
    JEL: J14 J26
    Date: 2015
  3. By: Nicholas-James Clavet; Jean-Yves Duclos; Bernard Fortin; Steeve Marchand
    Abstract: The federal government announced in its 2012 budget its intention to delay the age of eligibility for Old Age Security and the Guaranteed Income Supplement from 65 to 67 years. By the time the policy is fully implemented (i.e., in 2030), this delay will have increased net revenues of the federal government by 7.1 billion dollars per year (in constant 2014 dollars), but will reduce net provincial revenues by 638 million dollars. With constant labour and savings behaviour, this delay would also increase the percentage of individuals aged 65 and 66 years who are in the low income group from 6% to 17% (for an additional 100,000 low-income seniors in this age group) and would be most harmful to low-income seniors and to women. Alternative reforms to the Old Age Security could make it possible to achieve similar effects on public finances without having such large impacts on the low income rate among seniors.
    Keywords: Pensions, population aging, poverty, public finance, Canada,
    JEL: C53 D31 D63 H55 J11
    Date: 2015–03–18
  4. By: Alicia H. Munnell; Matthew S. Rutledge; Anthony Webb
    Abstract: The brief’s key findings are: *Federal Reserve data show that retirement preparedness has been declining over time, but studies on the level of preparedness offer conflicting assessments. *The National Retirement Risk Index (NRRI) finds half of households are “at risk,” while studies of optimal savings suggest less than one-tenth will fall short. *The optimal savings results depend crucially on two assumptions: *households spend less when their kids leave home (the NRRI assumes no decline); and *households plan for declining consumption in retirement (the NRRI assumes steady consumption). *While the issue remains unsettled, the Federal Reserve data are consistent with the NRRI finding that retirement shortfalls are a growing problem.
  5. By: Gindra Kasnauskiene (Vilnius university); Loreta Vebraite (Vilnius university)
    Abstract: Because of rapid population ageing Lithuania possesses new economic and social challenges. One of these challenges is the shortage of labour force in the future, which will have a negative impact on the country’s economy. Thus, in this paper the study on impact of one of the significant factors of population ageing - migration - on the economy of Lithuania is conducted. Using a system of variables of net migration, gross domestic product, wage and unemployment rate a structural vector error correction model is developed. The paper also claims that, there is urgent need to implement effective policy means in order to maximize the migration related opportunities and minimize the costs. In addition, while migration can contribute to the growth of Lithuanian economy, it cannot provide by itself a solution to the demographic problems and budgetary implications of an ageing population.
    Keywords: population migration, population ageing, structural vector error correction model, economic impact, migration policy
    JEL: J11 J61 O15
    Date: 2014–10
  6. By: Denis Gerstorf; Gizem Hülür; Johanna Drewelies; Peter Eibich; Sandra Duezel; Ilja Demuth; Paolo Ghisletta Elisabeth Steinhagen-Thiessen; Gert G. Wagner; Ulman Lindenberger
    Abstract: How socio-cultural contexts shape individual functioning is of prime interest for psychological inquiry. Secular increases favoring later-born cohorts in fluid intelligence measures are widely documented for young adults. In the current study, we quantify such trends in old age using data from highly comparable participants living in a narrowly defined geographical area and examine whether these trends generalize to quality of life indicators. To do so, we compared data obtained 20 years apart in the Berlin Aging Study (in 1990–93) and the Berlin Aging Study II (in 2013–14), applied a case-matched control design (per cohort, n = 161, Mage = 75), quantified sample selection using a nationally representative sample as the reference, and controlled for number of physical diseases. The later cohort performed better on the fluid intelligence measure (d = .85) and reported higher morale, less negative affect, and more positive affect (ds > .39) than the earlier cohort. We conclude that secular advances have resulted in better cognitive performance and perceived quality of life among older adults and discuss when and how advantages of later cohorts reach their limits.
    Keywords: Cohort, cognitive ability, well-being, sociocultural factors, individual differences
    Date: 2015
  7. By: Sandra Rigot (University paris North)
    Abstract: While private equity funds have become responsible for an enormous amount of investment in the economy due to the increasing interest of pension funds, the literature that analyses private equity allocation is very scarce. These types of investments are not only attractive for pension funds because they allow them to diversify their portfolios, but also for the economy. Indeed, they can be seen as long term investment because they undertake investment in real companies, supplying equity at different stages of their evolution with different structures of funding. In order to identify the flows and capture the underlying trends in asset allocation of pension funds, the objective of this paper is to investigate the effect of private equity allocation on global returns and the main characteristics of pension funds investing in private equity funds , particularly in venture capital and leverage buyouts, related to their liabilities profile and their mode of management, based on a reliable, confidential database in Canada and the United States over the 1996-2011 period.Our results first evidence a positive and significant effect of private equity allocation on global returns. Distinguishing between venture capital and leverage buyout shows that the impact of the first category on returns is higher than the second one. Second, the results based on a Tobit model for allocation to private equity show some important differences with respect to allocation to more traditional assets (i.e. equity). Indeed, defined benefit plans allocating to private equity are bigger, more diversified and mainly private funds. They do not consider the age of their members when deciding this type of allocation. This last result is important because it is not in accordance with the life cycle theory, contrary to what we might expect. Furthermore, in accordance with the literature, they present high discount rates, implying an incentive to allocate to more risky assets like private equity. Finally, pension funds do not give more importance to innovation oriented venture capital with respect to the more short-term profitability derived from LBO. Therefore, they do not seem to particularly participate in the funding of the innovation via VC investments, whereas they have long term liabilities that give them a strategic advantage to take risks and immobilize capital.
    Keywords: Pension funds; private equity, asset allocation, long term investment
    JEL: G23
    Date: 2014–10
  8. By: Tullio Jappelli (Università di Napoli Federico II, CSEF and CEPR); Immacolata Marino (Università di Napoli Federico II and CSEF); Mario Padula (Università della Svizzera italiana and CSEF)
    Abstract: In this paper we review household saving and debt trends in Italy. We summarize the available empirical evidence on Italians' motives to save, relying on macroeconomic indicators and data drawn from the Bank of Italy's Surveys of Household Income and Wealth from 1984 to 2012. The macroeconomic data indicate that households' saving has dropped significantly, although Italy continues to rank above most other countries for saving. Using microeconomic data we examine four indicators of household financial conditions: propensity to save, proportion of households with negative saving, proportion of households with debt, and proportion of households that lack access to formal credit markets. An international comparison shows that the level of debt and default risk among Italian households are relatively low. However, in light of the deep changes made to the Italian pension system, the fall in saving is a concern, particularly in the case of individuals who entered the labor market after the 1995 reform who have experienced the largest decline in pension wealth.
    Keywords: household saving, household debt, financial fragility, pension reforms
    Date: 2015–03–15
  9. By: Jean-Yves Duclos; Bouba Housseini
    Abstract: The evaluation of development processes and of public policies often involves comparisons of social states that differ in income distributions, population sizes and life longevity. This may require social evaluation principles to be sensitive to the quality, the quantity and the duration of lives. This paper 1) reviews some of the normative issues at stake, 2) proposes and discusses some specific methods to address them in a generalized utilitarian framework, and 3) briefly illustrates the application of some of these methods to the global distribution of incomes, population sizes and longevity over the last century. Depending on the approach taken, it is found inter alia that global social welfare in 2010 can be deemed to be between 1.8 and 407 times that of 1910, the role given to the quantity of lives being particularly important in that assessment.
    Keywords: Global welfare, critical-level utilitarianism, social evaluation, longevity, life expectancy, population size,
    JEL: D31 D63 I32 O15 Q56
    Date: 2015–03–18
  10. By: David Candon (University College Dublin)
    Abstract: Estimating the unbiased effect of health shocks on employment is an important topic in both health and labour economics. This is particularly relevant to cancer, where improvements in screening and treatments have led to increases in survival for nearly all types of cancer. In order to address the issue of selection bias, I estimate the effect of cancer on employment for a high-risk cancer sample, male workers over the age of 65, thus attenuating the impact of many cancer risk factors. This identification strategy balances the covariates between the cancer and the non-cancer groups in numerous tests. Respondents who are diagnosed with cancer are 13.2 percentage points less likely to work than their non-cancer counterparts. The results also appear insensitive to omitted confounders.
    Keywords: Cancer; Employment; Labour market
    JEL: I10 I18 J21 J26
    Date: 2015–03–20
  11. By: Mehmet Fedai KAYA (Selcuk University, Science Faculty, Department of Statistics); Muslu Kazım KÖREZ (Selcuk University, Science Faculty, Department of Statistics); Süleyman DÜNDAR (Afyon Kocatepe University, Science Faculty, Department of Statistics)
    Abstract: The distribution of lifetime is one of the most important factors for the determination of the population volume. Knowing the population volume is of great importance for the future planning. For the future planning depending on the population volume, it is necessary to know the distribution of lifetime. Accordingly in this study, the distribution of lifetime of people in Turkey was examined. Obtained from the Turkish statistical Institute (TUIK) lifetime statistics of the years between 2004 and 2012 were used in this study. Data contain lifetime between 0-105 years. Lifetime distribution was found for each year. Furthermore the probability distribution was found that a person who was known to have lived at least c years might live more at least x years. Lifetime was modelled by three parameters Dagum distribution.
    Keywords: Lifetime Distribution, Dagum Distribution, Parameter, Estimation, Average Life
    JEL: C15 C13
    Date: 2014–06

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