nep-age New Economics Papers
on Economics of Ageing
Issue of 2015‒09‒11
twenty-one papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pension Reforms in Mauritius: Fair and Fast—Balancing Social Protection and Fiscal Sustainability By Mauricio Soto; Vimal Thakoor; Martin Petri
  2. Facing Demographic Challenges: Pension Cuts or Tax Hikes By George Kudrna; Chung Tran; Alan Woodland
  3. An Overlapping Generation Model of Labour Productivity and Economic Growth in Colombia By Fernando MESA PARRA
  4. Narrow Framing and Long-Term Care Insurance By Daniel Gottlieb; Olivia S. Mitchell
  5. La construction d’un socle de protection sociale au Burundi By Ntimarubusa, Frederic
  6. Retirement and the Marginal Utility of Income By Andrew E. Clark; Yarine Fawaz
  7. National Transfer Accounts and Generational Flows By Bernardo L. Queiroz
  8. Preliminary Observations on Social Security and Health Care Systems of the BRICS By Pedro Lara de Arruda; Mary MacLennan
  9. Scaling up Cash Transfer Programmes in Kenya By Winnie Mwasiaji
  10. Social Protection Systems in Latin America and the Caribbean: Dominican Republic By Milena Lavigne; Luis Hernán Vargas
  11. Social Protection Systems in Latin America and the Caribbean: Argentina By Fabián Repetto; Fernanda Potenza Dal Masetto
  12. Social Protection Systems in Latin America and the Caribbean: Ecuador By Mariana Naranjo Bonilla
  13. Social Protection Systems in Latin America and the Caribbean: Colombia By Lucía Mina
  14. Social Protection Systems in Latin America and the Caribbean: Peru By Milena Lavigne
  15. Social Protection Systems in Latin America and the Caribbean: Uruguay By Fernando Filgueira
  16. Social Protection Systems in Latin America and the Caribbean: Costa Rica By Isabel Román
  17. Social Protection Systems in Latin America and the Caribbean: Paraguay By Milena Lavigne
  18. Social Protection Systems in Latin America and the Caribbean: Mexico By Enrique Valencia Lomelí
  19. Social Protection Systems in Latin America and the Caribbean: Chile By Claudia Robles Farías
  20. Social Protection Systems in Latin America and the Caribbean: Brazil By Claudia Robles; Vlado Mirosevic
  21. Social Protection Systems in Latin America and the Caribbean: A Comparative Perspective By Simone Cecchini; Fernando Filgueira; Claudia Robles

  1. By: Mauricio Soto; Vimal Thakoor; Martin Petri
    Abstract: Despite important past reforms, the ageing population of Mauritius threatens the sustainability of its pension system. This paper examines how pension spending might increase without reforms and discusses reforms options. The findings suggest that unifying the retirement age and indexing it to life expectancy would contribute most significantly to secure and sustainable pensions. The poverty reducing objective of the universal pension can be improved by better targeting. The old age protection objective of the National Pension Fund could be strengthened by increasing contribution and replacement rates. Implementing changes faster should result in less drastic future changes and fairer outcomes.
    Keywords: Demographic transition;Aging;Ageing;Social safety nets;Pension reforms;Pensions;Population;Fiscal sustainability;Fiscal policy;Mauritius;Mauritius;pension reform, pension, retirement, defined benefit, retirement age, Studies of Particular Policy Episodes, Social Security and Public Pensions, Demographic Trends and Forecasts,
    Date: 2015–06–19
  2. By: George Kudrna; Chung Tran; Alan Woodland
    Abstract: In this paper, we investigate two .fiscal policy options to mitigate fiscal pressure arising from an ageing of Australian population: pension cuts or tax hikes. Using a computable overlapping generations model, we .nd that while the two policy options achieve the same .fiscal goal, the macroeconomic and welfare outcomes differ significantly. Future generations prefer pension cuts, whereas current generations prefer tax hikes to .finance age-related government spending commitments. Interestingly, taxing consumption or income results in opposing effects on macroeconomic aggregates and welfare across different skill types of households. Increases in the consumption tax rate have positive effects on labour supply, domestic assets and output per capita (similarly to pension cuts), but reduce the welfare of low income households most. Conversely, increases in progressive income or payroll taxes have negative effects on most macroeconomic aggregates but reduce the welfare of low income households least. Our results highlight the intra- and inter-generational conflicts of interest and political constraints when implementing any structural fiscal reforms.
    Keywords: : Demographic Transition, Fiscal Cost, Fiscal Policy, Welfare, Overlapping Generations, Dynamic General Equilibrium
    JEL: H2 J1 C68
    Date: 2015–04
  3. By: Fernando MESA PARRA
    Abstract: This paper focuses on the decomposition of real wages in Colombia both by workers' ages and by cohorts, which overlap over time. The paper analyses how the Colombia's labour structure has undergone important changes in the period 1982-2007. This period has been characterized by a demographic transition that has tilted the balance from a relatively young population to an older one. The effects of capital accumulation have been estimated and modelled considering the presence of ever more sophisticated machinery, usually replacing less-skilled, younger workers, in relation to older and more qualified ones. In general real wages present a curved shape for each generation, as is acknowledged in the life-cycle hypothesis, according to which people generally start their working life with low incomes and rising debts and then obtain higher income and accumulate assets.
    Keywords: Demographic trends, Macroeconomic effects, Wage levels andstructure, Wage differential, Intergenerational income distribution.
    JEL: J11 J23 E24
    Date: 2015–05–20
  4. By: Daniel Gottlieb (The Wharton School, University of Pennsylvania); Olivia S. Mitchell (The Wharton School, University of Pennsylvania)
    Abstract: We propose a model of narrow framing in insurance and test it using data from a new module we designed and fielded in the Health and Retirement Study. We show that respondents subject to narrow framing are substantially less likely to buy long-term care insurance than average. This effect is much larger than the effects of risk aversion or adverse selection, and it offers a new explanation for why people underinsure their later-life care needs.
    Date: 2015–06
  5. By: Ntimarubusa, Frederic
    Abstract: Since 2011, Burundi has been engaged in the process of building a social protection floor with the adoption of the National Social Protection Policy. This Policy will help to extend the coverage at the majority of Burundian population which is now excluded by the existing schemes. The task will not be easy as more than 60% of the Burundian population live below the poverty line. But in our opinion, the government can achieve the extension of the coverage by adopting strong measures to reduce poverty, measures which are in the Strategic Document to Reduce Poverty 2012-2016 and the Vision 2025.The government will also have to take strong measures to combat social exclusion such as social pensions, family allowances and health care assistance to the needed. The main challenge for the government will be to finance all these social programs. It is increasingly accepted that the sustainable financing of social programs requires domestic and external financing. Then, finding the necessary national fiscal space and identifying exit strategies from external financing remain paramount for the government. Another challenge for the government will be the governance of that social protection floor. It is also accepted that efficient use of resources is crucial. The capacity to deliver social security benefits is increasingly viewed as being linked strongly to the capacity of management and the quality of administration. Meeting this obligation will help to raise contribution compliance and the public trust in social protection agencies.
    Keywords: Burundi; social policy
  6. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Yarine Fawaz (UAB - Universitat Autonoma de Barcelona)
    Abstract: The individual level of subjective well-being (SWB) has been shown to predict a number of future observable outcomes. Behaviour may however also be affected by the slope of SWB with respect to certain variables. We here use latentclass analysis to model both intercept and slope heterogeneity in the SWB-income relationship, and construct a continuous measure of the marginal utility of income. We show this marginal utility does predict future behaviour: those who value income more (who have a higher income elasticity of well-being) are less likely to retire. This correlation is found conditional on both the level of income and the level of well-being.
    Date: 2015–09
  7. By: Bernardo L. Queiroz (IPC-IG)
    Abstract: "The economic life cycle is characterised by three distinct phases: two phases of economic dependence and one phase of economic independence. In most societies, children consume resources generated by adults, transferred to them by family or by the public sector. The elderly, in turn, possess an accumulation of assets accrued during their active economic phase, and of resources produced and transferred by adults or other credit operations. Over each period of time, every society determines—by social norms, laws and individual decisions—the combination of mechanisms for resource allocation over life cycles. Intergenerational transfers represent a significant portion of the distributed production and time allocation over the life cycle and become increasingly important given the rapid demographic changes that have been happening around the world over the last decades. (…)
    Keywords: National Transfer Accounts, Generational Flows
    Date: 2014–12
  8. By: Pedro Lara de Arruda (IPC-IG); Mary MacLennan (IPC-IG)
    Abstract: "This summary provides some preliminary findings of research on social security and health care policies in the BRICS countries. Thus far, our research demonstrates some basic institutional information about the social security and health care policies of the BRICS countries, as well as about their complementary policy aims." (...)
    Keywords: Social Security, Health Care Systems, BRICS
    Date: 2015–06
  9. By: Winnie Mwasiaji (IPC-IG)
    Abstract: "The Kenyan Ministry of Labour, Social Security & Services (MLSSS) implements three main cash transfer programmes that were scaled up in 2013 and will be further scaled up and integrated under the Inua Jamii programme: . the Cash Transfer to Orphans and Vulnerable Children (CT-OVC), started in 2004 and which covered 259,000 beneficiary households in 2014; . the Older Persons Cash Transfer Programme (OPCT), targeted at those aged 65+ and which started in 2006 (164,000 beneficiary households); and . the Cash Transfer to Persons with Severe Disabilities (PWSDCT), started in 2010 (27,200 beneficiary households)."(...)
    Keywords: Scaling up, Cash Transfer Programmes, Kenya
    Date: 2015–04
  10. By: Milena Lavigne (IPC-IG); Luis Hernán Vargas (IPC-IG)
    Abstract: During the 20th century, the political and social development of the Dominican Republic was marked by the dictatorship of Rafael Trujillo (1930–1961), who forged the institutional and legal bases of Dominican social policies, and successive governments headed by Joaquín Balaguer (1960–1962, 1966–1978 and 1986–1996). During the 1990s, the Dominican government started once more to implement social policies, among which we can highlight the Fund for the Promotion of Community Initiatives (PROCOMUNIDAD), the countrys first poverty reduction programme. During the 2000s, some social reforms were undertaken, such as the creation of the Social Cabinet and reform of the pension system, which set up a model of individual capitalisation. Finally, after the economic crisis that affected the Dominican Republic in 2003, programmes aiming to reduce malnutrition (Comer es Primero) and poverty (Solidaridad) began to be implemented.(…)
    Keywords: Social Protection Systems, Latin America, Caribbean, Dominican Republic
    Date: 2015–07
  11. By: Fabián Repetto (IPC-IG); Fernanda Potenza Dal Masetto (IPC-IG)
    Abstract: "The social protection regime in Argentina has undergone changes over the past two decades. From the early 1990s until the 2001/02 crisis, privatisation of social security and decentralisation of health care and education in favour of provincial governments prevailed, while actions aimed at reducing poverty proliferated and successive (and failed) attempts were made to form a social authority. Finally, starting in 2001, a new regime began to take shape, whose central features included strengthening the role of the State as the driver of decentralised health care and education systems and unifying initiatives aimed at reducing poverty. In addition, the State has regained control of retirement funds and made advances in the progressive universalisation of social security by linking the contributory and non-contributory pillars. However, Argentina has not managed to strengthen social institutionality to promote integration based on measures that would be both relevant and necessary, like those described."(...)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Argentina
    Date: 2014–11
  12. By: Mariana Naranjo Bonilla (IPC-IG)
    Abstract: "Over the past three decades, the Ecuadorian social protection system has been characterised by universal interventions in the education and health care sectors, along with the implementation of specific social welfare programmes targeted at the poorest populations, such as the Bono de Desarrollo Humano (Human Development Bonus—BDH) and a welfare pension for persons with disabilities. Although Ecuador has managed to expand its social infrastructure and the populations health and education have improved, the redistributional effects of social policies have been limited, especially among rural and marginalised urban populations in the major cities of the country."(...)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Ecuador
    Date: 2014–11
  13. By: Lucía Mina (IPC-IG)
    Abstract: Social protection tends to revolve around the labour market, social security and social welfare. In Colombia, these issues are characterised by social disarticulation, both at the level of institutional capacity, as well as between supply and demand. In the early 21st century, the social protection system began to adopt a social risk management approach, understood as a set of public policies to reduce vulnerability and improve the quality of life of Colombians, especially among the most unprotected population. Since then, universal social protection has been associated with the notion of vulnerability, with a marked emphasis on social welfare.(…)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Colombia
    Date: 2014–12
  14. By: Milena Lavigne (IPC-IG)
    Abstract: In the past decade Peru has undergone great economic and social changes.The country has experienced rapid economic growth, accompanied by increased social policy efforts. Indeed, since the 2000s, the Peruvian State has adopted important innovations for the provision of basic social services in the areas of health and education. Efforts have also been made to develop and expand poverty reduction programmes, such as Juntos, as well as noncontributory social pensions for elderly people living in poverty. (...)
    Keywords: Social Protection Systems, Latin America, Caribbean, Peru
    Date: 2014–10
  15. By: Fernando Filgueira (IPC-IG)
    Abstract: Uruguays welfare state can be characterised by its universal primary education system, its early and robust social security system as well as widespread health coverage and benefits. Uruguay also has one of Latin Americas highest levels of social spending in terms of Gross Domestic Product (GDP) (24.3 per cent) and as a percentage of total public spending (80.6 per cent)..(…)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Uruguay
    Date: 2014–12
  16. By: Isabel Román (IPC-IG)
    Abstract: In the mid-20th century, Costa Rica designed a universal social protection system dedicated to the promotion of citizenship and fundamental social rights. The institutionalisation of social policy, the development of universal policies for health care, security, education, housing and basic services (water and electricity), together with significant economic growth, allowed for a continuous improvement in human development and significant, internationally recognized achievements. Among these are the reduction in infant mortality, which dropped from 123 children per 1000 born in 1940, to 61.5 in 1970 and 9.1 in 2011; the increase in life expectancy, which rose from 55.6 years in 1950 to 79.3 in 2011; and the reduction of poverty incidence, from 50 per cent of households in 1950 to 20 per cent at the end of the century.(…)
    Keywords: Social Protection Systems, Latin America, Caribbean, Costa Rica
    Date: 2015–06
  17. By: Milena Lavigne (IPC-IG)
    Abstract: Since its transition to democracy at the beginning of the 1990s, Paraguay has made considerable progress in confronting poverty and social inequality. The fact that poverty has become a major issue on the public agenda since then has furthered the development of social protection and promotion programmes. The implementation of social policies has focused not only on education, health and pensions, but also on youth, employment protection and housing, showing a new approach to poverty and vulnerability. (...)
    Keywords: Social Protection Systems, Latin America, Caribbean, Paraguay
    Date: 2014–10
  18. By: Enrique Valencia Lomelí (IPC-IG)
    Abstract: In terms of rights, the Mexican social protection system (MSPS) has been relatively ineffective; it is incomplete, weakly integrated, segmented and stratified, weak in terms of labour protection and conservative in its gender approach, and, furthermore, it is also fiscally weak. Alongside social security and educational organisations, institutions of social protection for poor people have recently been created. However, enormous challenges still remain for the MSPS to guarantee social rights. Limited advances in the progressivity of rights, which have come with the creation of new institutions, may maintain levels of profound inequality, without the universalisation of benefits.(…)
    Keywords: Social Protection Systems, Latin America, Caribbean, Mexico
    Date: 2015–02
  19. By: Claudia Robles Farías (IPC-IG)
    Abstract: Chile has a long history of implementing social policies. It was one of the first countries in Latin America to expand free health care coverage and education, incorporating cash and in-kind transfers to promote access to social services and offer diverse protection mechanisms for its most vulnerable population groups. That said, its current social protection model is the result of a series of efforts, institutions and policies that have been consolidated over time.(…)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Chile
    Date: 2015–03
  20. By: Claudia Robles (IPC-IG); Vlado Mirosevic (IPC-IG)
    Abstract: In recent years, Brazil has developed a series of economic and social policies designed to overcome social exclusion, hunger, inequality and poverty. The non-contributory social protection programmes developed over the past two decades are some of the best known of these efforts. However, Brazil has also implemented substantial economic reforms, driving economic growth, creating new job opportunities and regulating the labour market—including raising the minimum wage. These actions, together with the expansion and improvement of both contributory and non-contributory benefits, have helped improve access to welfare for the population as a whole.(…)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Brazil
    Date: 2015–02
  21. By: Simone Cecchini (IPC-IG); Fernando Filgueira (IPC-IG); Claudia Robles (IPC-IG)
    Abstract: "National case studies on social protection systems in Latin America and the Caribbean, published by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), reveal that over the past 10 years social protection systems and, in general, social policies in the region have been transformed. This shift is very different than the nature of reforms in the 1980s and early 1990s. While that time period was characterised by the State pulling back from and limiting its role in social actions (reducing or freezing social spending, privatisation, restricted targeting), the new century has seen the State play a larger role in social issues (expanded coverage, partial or total re-nationalisation, increased social spending)."(...)
    Keywords: Social Protection Systems, Latin America, Caribbean, Comparative Perspective
    Date: 2015–04

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.