nep-age New Economics Papers
on Economics of Ageing
Issue of 2015‒07‒11
thirteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Seniority Wages and the Role of Firms in Retirement By Wolfgang Frimmel , Thomas Horvath, Mario Schnalzenberger, Rudolf Winter-Ebmer
  2. Slowed or Sidelined? The Effect of “Normal” Cognitive Decline on Job Performance Among the Elderly By Anek Belbase; Mashfiqur R. Khan; Alicia H. Munnell; Anthony Webb
  3. Home Production and Retirement in Couples: A Panel Data Analysis By Bonsang, Eric; van Soest, Arthur
  4. Informal Care and the Great Recession By Joan Costa-Font; Martin Karlsson; Henning Øien
  5. Short and long run estimates of the local effects of retirement on health. By Fe, Eduardo; Hollingsworth, Bruce
  6. On The Local Causal Effects of Retirement on Human Capital By Eduardo Fé; Mario Pezzino
  7. A gender perspective on older workers’ employment and working conditions By Patricia Vendramin; Gérard Valenduc
  8. Does Social Security Continue to Favor Couples? By Nadia S. Karamcheva; April Yanyuan Wu; Alicia H. Munnell
  9. Employer Downsizing and Older Workers' Health By Gutierrez, Italo A.; Michaud, Pierre-Carl
  10. A majority of people would prefer to die at home, but few actually do so By Sophie Pennec; Joëlle Gaymu; Françoise Riou; Elisabeth Morand; Silvia Pontone; Régis Aubry; Chantal Cases
  11. Wealth Inequality, Family Background, and Estate Taxation By Fang Yang; Mariacristina De Nardi
  12. Transmission of vocational skills at the end of career: horizon effect and technological or organisational change By Nathalie Greenan; Pierre-Jean Messe
  13. Has the EU become more intrusive in shaping national welfare state reforms? Evidence from Greece and Portugal By Sotiria Theodoropoulou

  1. By: Wolfgang Frimmel , Thomas Horvath, Mario Schnalzenberger, Rudolf Winter-Ebmer
    Abstract: In general, retirement is seen as a pure labor supply phenomenon, but firms can have strong incentives to send expensive older workers into retirement. Based on the seniority wage model developed by Lazear (1979), we discuss steep seniority wage profiles as incentives for firms to dismiss older workers before retirement. Conditional on individual retirement incentives, e.g., social security wealth or health status, the steepness of the wage profile will have different incentives for workers as compared to firms when it comes to the retirement date. Using an instrumental variable approach to account for selection of workers in our firms and for reverse causality, we find that firms with higher labor costs for older workers are associated with lower job exit age.
    Keywords: retirement, seniority wages, firm incentives
    JEL: J14 J26 J31 H55
    Date: 2015–07
  2. By: Anek Belbase; Mashfiqur R. Khan; Alicia H. Munnell; Anthony Webb
    Abstract: This paper examines the relationship between age-related cognitive decline and three potential workplace outcomes: 1) coping with increased job difficulty; 2) shifting to a less cognitively demanding job; and 3) retiring early. It uses data from the Health and Retirement Study (HRS) and the O*NET database. Critical components of the analysis are the metric used to measure cognitive decline, inclusion of cognitive reserve as an independent variable, and the use of overlapping 10-year observation windows. A key limitation is that the study cannot conclusively discern a causal relationship between cognitive decline and workforce exit. The paper found that: - About 10 percent of workers between the ages of 55 and 69 experienced steep cognitive decline over a 10-year period. - Workers experiencing steep cognitive decline were more likely to “downshift” to a less demanding job or retire than workers experiencing no cognitive decline. - Workers experiencing steep cognitive decline retired significantly earlier than planned, compared to workers who experienced no change in cognitive ability. - Workers without cognitive reserves were more likely to exit the workforce and retire earlier than planned, compared to workers with cognitive reserves. The policy implications of the findings are: - Cognitive decline might prevent a significant minority of older individuals from working to their planned retirement ages, and thus should be considered when assessing reforms that incent delayed retirement. - Policies that support “downshifting” to a cognitively less demanding job might help workers at risk of steep cognitive decline to remain in the labor force. - Further research is needed to identify whether workers in specific occupations are more susceptible to age-related decline than others, and whether anything can be done to moderate the effect of age-related decline in work ability.
    Date: 2015–06
  3. By: Bonsang, Eric (LISER (CEPS/INSTEAD)); van Soest, Arthur (Tilburg University)
    Abstract: We analyse the effects of retirement of one partner on home production by both partners in a couple. Using longitudinal data from Germany on couples, we control for fixed household specific effects to address the concern that retirement decisions are correlated with unobserved characteristics that also affect home production. For males and females, we find that own retirement significantly increases the amounts of home production. There are negative cross-effects of retirement on home production done by the partner. The fall in household income at retirement of one of the partners is largely compensated by an increase in total household production.
    Keywords: time allocation, home production, retirement, couples
    JEL: J22 J29 J14
    Date: 2015–06
  4. By: Joan Costa-Font (London School of Economics); Martin Karlsson (CINCH – Health Economics Research Center); Henning Øien (University of Oslo)
    Abstract: Macroeconomic downturns can have an important impact on the availability of informal and formal long-term care. This paper investigates how the market for informal care changed during and after the Great Recession in Europe. We use data from the Survey of Health, Aging and Retirement in Europe, which includes a rich set of variables covering waves before and after the Great Recession. We find evidence of an increase in the availability of informal care and a reduction in the use of formal health services (doctor visits and hospital stays) after the economic downturn when controlling for year and country fixed effects. This trend is mainly driven by changes in care provision of individuals not cohabiting with the care recipient. We also find a small negative association between old-age health and crisis severity. The results are robust to the inclusion of individual characteristics, individual-specific effects and regionspecific time trends.
    Keywords: long-term care, informal care, great recession, downturn, old age dependency
    JEL: J1 I18
    Date: 2015–02
  5. By: Fe, Eduardo; Hollingsworth, Bruce
    Abstract: We explore the existence of short and long term effects of retirement on health. Short term effects are estimated with a regression discontinuity design which is robust to weak instruments and where the underlying assumptions of continuity of potential outcomes are uncontroversial. To identify the long term effects we propose a parametric model which, under strong assumptions, can separate normal deterioration of health from the causal effects of retirement. We apply our framework to the British Household Panel Survey, and find that retirement has little effect on health. However, our estimates suggest that retirement opens the gate to a sedentary life with an impoverished social component and this is a channel through which retirement could indirectly affect health in the long run.
    Keywords: Regression discontinuity, retirement, instrumental variables, health, wild bootstrap.
    JEL: C10 C21 C30 I12 I18 J26
    Date: 2015
  6. By: Eduardo Fé; Mario Pezzino
    Date: 2015
  7. By: Patricia Vendramin; Gérard Valenduc
    Abstract: This working paper aims to give a structured gender analysis of the working and employment conditions of older workers (aged 50 and over).
    Keywords: Employment, Gender, Working conditions
    Date: 2014–09
  8. By: Nadia S. Karamcheva; April Yanyuan Wu; Alicia H. Munnell
    Abstract: While dramatic increases in women’s labor supply and earnings have led to a substantial decline in the fraction of women eligible for spouse benefits at retirement, most wives still receive a survivor benefit, as wives still typically have lower earnings than their husbands and live longer. Using the MINT microsimulation model and the HRS data linked with Social Security administrative earnings records, this paper examines the extent to which Social Security continues to favor couples and will do so in the future. The paper found that: - While the Old-Age and Survivors Insurance program still distributes lifetime income from singles to couples, the transfers appear to be shrinking over time. - Nevertheless, couples are still projected to have a higher benefit/tax ratio, a lower median net tax rate, and a greater likelihood of receiving positive net transfers from the system compared to those who are never married or divorced. - The increased labor force participation and earnings of women have contributed significantly to the decline in redistribution from men to women, and from singles to couples, while the effect of declining marriage rates has only a modest effect. The policy implications of the findings are: - Family benefit provisions within the Social Security program can have a significant impact on various measures of redistribution. - Policymakers may find the results of this paper helpful in evaluating any reform proposals that would change these provisions.
    Date: 2015–06
  9. By: Gutierrez, Italo A. (RAND); Michaud, Pierre-Carl (University of Québec at Montréal)
    Abstract: We estimate the effects of employer downsizing on older workers' health outcomes using different approaches to control for endogeneity and sample selection. With the exception of the instrumental variables approach, which provides large imprecise estimates, our results suggest that employer downsizing increases the probability that older workers rate their health as fair or poor; increases the risk of showing symptoms of clinical depression; and increases the risk of being diagnosed with stroke, arthritis, and psychiatric or emotional problems. We find weaker evidence that downsizing increases the risk of showing high levels of C-reactive protein (CRP), a measure of general inflammation. We find that downsizing affects health by increasing job insecurity and stress, but that its effects remain statistically significant after controlling for these pathways, suggesting that other mechanisms such as diminished morale and general demotivation also affect worker health. Our findings suggest that employers ought to consider actions to offset the detrimental health effects of reducing personnel on their remaining (older) workers.
    Keywords: older workers, employer downsizing, health outcomes
    JEL: I12 M51
    Date: 2015–06
  10. By: Sophie Pennec (INED); Joëlle Gaymu (INED); Françoise Riou (Hôpital universitaire de Rennes -Pontchaillou); Elisabeth Morand (INED); Silvia Pontone (Hôpital universitaire Robert Debré, APHP, Paris); Régis Aubry (Hôpital universitaire de Besançon - Jean Minjoz); Chantal Cases (INED)
    Abstract: Most people would prefer to die in their own bed, but in fact only a quarter of deaths occur in the home. The “Fin de vie en France” [End of life in France] survey follows the residential and medical trajectories of patients up to their death. In cases of non-sudden death, 45% of persons are living at home four weeks before they die. The most frequent pattern is a move from home to hospital before death (30%); just 14% remain at home throughout the last month of life. A transfer back home from hospital is much less frequent (2%). The complexity of treatment often makes home care unfeasible, so a hospital transfer is inevitable. This is the reason most frequently given for not respecting the patient’s wish to die at home.
    Date: 2015
  11. By: Fang Yang (Louisiana State University); Mariacristina De Nardi (UCL and Federal Reserve Bank of Chicago)
    Abstract: This paper provides two main contributions. First, it proposes a new theory of wealth inequality that merges two sources of inequality previously proposed: bequests motives and inheritance of ability of across generations, and an earnings process that allows for more earnings risk for the richest. Second, it uses our calibrated framework to study the importance of parental background and the effects of changing estate taxation on inequality, aggregate capital accumulation, intergenerational mobility, welfare, and on family background as a source of inequality. Our calibrated model generates realistically skewed distributions for wealth, earnings, and bequests, and a correlation of lifetime earnings and wealth at retirement that is close to that in the data and is thus a good laboratory to use to study these questions. We find that parental background is a crucial determinant of one's expected lifetime utility. We also find that increasing estate taxation from its effective levels observed over many years, to levels that are closer to the statutory ones observed in year 2000, would significantly reduce wealth concentration in the hands of the richest few and the role of parental background in determining one's lot in life. The implied welfare gains of such a policy would be positive for 71% of the population. For those experiencing losses, their loss would be a one-time cost of the order of 11% of average income.
    Date: 2015
  12. By: Nathalie Greenan; Pierre-Jean Messe
    Date: 2015
  13. By: Sotiria Theodoropoulou
    Abstract: This paper provides a comparative analysis of the Memorandums of understanding (MoUs) in Greece and Portugal in the areas of old-age pensions and labour market policies and shows that, compared to earlier economic governance instruments, the MoUs have entailed much greater interference in setting policy objectives, tighter surveillance and stricter enforcement.
    Keywords: Collective bargaining, Economic policy, Employment, Flexicurity, Industrial relations, Labour law, Social policy, Welfare state
    Date: 2014–09

This nep-age issue is ©2015 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.