nep-age New Economics Papers
on Economics of Ageing
Issue of 2015‒11‒15
fifteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Old-Age Pension and Intergenerational Living Arrangements By Chen, Xi
  2. Will Social Security Keep Fewer of Tomorrow’s Elderly Out of Poverty? By Steven A. Sass
  3. Distributional Effects of Social Security Reforms: the Case of France By Raquel Fonseca Benito; Thepthida Sopraseuth
  4. Does Eliminating the Earnings Test Increase the Incidence of Low Income among Older Women? By Theodore Figinski; David Neumark
  5. Nonmonetary Job Characteristics and Employment Transitions at Older Ages By Marco Angrisani; Arie Kapteyn; Erik Meijer
  6. Fully Funded Social Security Pensions, Lifetime Risk and Income By Laps, Jochen
  7. Labor Market Policies and Self-Employment Transitions of Older Workers By Dimitris Christelis; Raquel Fonseca Benito
  8. Social Security Contributions and Return Migration among Older Male Mexican Immigrants By Emma Aguila; Alma Vega
  9. CBO’s 2014 Long-Term Projections for Social Security: Additional Information By Congressional Budget Office
  10. The “Costs” of Informal Care: An Analysis of the Impact of Elderly Care on Caregivers' Subjective Well-being in Japan By Niimi, Yoko
  11. Process Evaluation of Older Americans Act Title III-C Nutrition Services Program By James Mabli; Nicholas Redel; Rhoda Cohen; Erin Panzarella; Mindy Hu; Barbara Carlson
  12. Older Americans Act Nutrition Programs Evaluation: Meal Cost Analysis By Jessica Ziegler; Nicholas Redel; Linda Rosenberg; Barbara Carlson
  13. Pension Reform in Public Higher Education By Hyatt, James A.
  14. Overconfidence and Health Insurance Participation among the Elderly By Huang, Wei; Luo, Mi
  15. Philippines 2011 National Transfer Accounts Estimates of Consumption and Labor Income Age Profiles: Discussions on the 1991-2011 Age Profile Change and Implications on Economic Gains from the First Demographic Dividend By Racelis, Rachel H.; Abrigo, Michael Ralph M.; Salas, J.M. Ian S.; Herrin, Alejandro N.

  1. By: Chen, Xi (Yale University)
    Abstract: China launched a pension program for rural residents in 2009, now covering more than 300 million Chinese. This program offers a unique setting for studying the ageing population, given the rapidity of China's population ageing, traditions of filial piety and co-residence, decreasing number of children, and dearth of formal social security, at a relatively low income level. This paper examines whether receipt of the old-age pension payment equips elderly parents and their adult children to live apart and whether parents substitute children's time involved in instrumental support to them with service consumption. Employing a regression discontinuity (hereafter RD) design to a primary longitudinal survey conducted in Guizhou province of China, this paper overcomes challenges in the literature that households eligible for pension payment might be systematically different from ineligible households and that it is difficult to separate the effect of pension from that of age or cohort heterogeneity. Around the pension eligibility age cut-off, results reveal large and significant reduction in intergenerational co-residence of the extended family and increase in service consumption among elderly parents.
    Keywords: rural pension, RD Design, living arrangement, service consumption
    JEL: H55 I38 J14 J22
    Date: 2015–11
  2. By: Steven A. Sass
    Abstract: Social Security has been remarkably successful in reducing old-age poverty. The elderly had tradition­ally been a distinctly poor population. As recently as 1959, more than one out of three older Americans had incomes below the federal poverty threshold – twice the rate for working-age adults and more than 10 percentage points above the rate for children. Social Security is largely credited with reducing the incidence of poverty among the elderly today below the rate for both children and working-age adults. This achievement will be challenged by Social Security’s long-term financing shortfall. In its initial attempt to close the shortfall, Congress in 1983 raised the program’s Full Retirement Age (FRA) from 65 to 67, cutting benefits by 13 percent when fully in place, for workers turning 62 in 2022. The Social Security Trust Fund is nonetheless projected to be depleted in 2034. Absent additional revenues, benefits would then be cut an additional 21 percent. This brief reviews studies by the Social Security Administration’s Retirement Research Consortium that address the challenge of keeping the elderly out of poverty. Since poverty is hard to define, the first section presents the government’s “official” and recently developed “supplemental” definitions. The second section discusses the reduction in old-age poverty since the enactment of Social Security, as indicated by the official statistics. The third section compares official and supplemental estimates of elderly poverty today, and the ability of each measure to identify individuals experiencing financial distress. The fourth section shows that the magnitude of the challenge of keeping the elderly out of poverty tomor­row depends on how poverty is defined. The final section concludes that, if the supplemental measure is better, Social Security and the safety net could need significant structural adjustments to avoid a spike in poverty should benefits be cut.
    Date: 2015–11
  3. By: Raquel Fonseca Benito; Thepthida Sopraseuth
    Abstract: This paper uses a calibrated dynamic life-cycle model to quantify the long-run distributional impact of two opposite Social Security reforms: modifying the parameters of a defined benefit (DB) plan (such as in France with Ayrault’s reform) or switching to a notional defined contribution (NDC) plan (such as in Italy). Both reforms yield an inequal distribution of welfare losses. Low-skilled workers are the main losers of the reforms. This is so for different reasons in each reform. In the case of Ayrault’s reform, low-skilled individuals delay retirement by 2 years, up to age 62. In switching to a NDC scheme, low-skilled workers’ pensions fall substantially. In NDC schemes, inequalities along the working-life are directly translated into inequalities in pension levels. The switch from a DB plan to the Italian reform yields substantial welfare losses, pensions drastically fall, and individuals save more. Since low-skilled workers do not save as much as middle or high-skilled workers, the switch to NDC schemes leads to a more unequal society in terms of asset distribution. Cet article utilise un modèle de cycle de vie dynamique calibré pour quantifier l’impact distributif à long terme de deux réformes du système de retraite : la première modifie les paramètres d’un système à prestations déterminées (PD) (comme la réforme Ayrault en France). La seconde est fondée que le passage à un système de comptes notionnels à contribution définie (NDC) (comme en Italie). Les deux réformes donnent lieu à une répartition inégale des pertes en bien-être. Les travailleurs peu qualifiés sont les principaux perdants des réforme. Il en est ainsi pour des raisons différentes. Dans le cas de la réforme Ayrault, les individus peu qualifiés retardent la retraite de 2 ans, jusqu’à 62 ans. Dans un système de retraite NDC, les pensions des travailleurs peu qualifiés sont sensiblement réduites. Les inégalités au long de la vie active sont directement traduites en inégalités dans le niveau des pensions. Le passage au régime NDC génère d’importantes pertes de bien-être. Les pensions sont réduites, les individus épargnent davantage. Puisque les travailleurs peu qualifiés n’épargent pas autant que les autres travailleurs, le passage au régime NDC conduit à une société plus inégalitaire en termes de répartition du patrimoine financier.
    Keywords: Pension reforms, life-cycle heterogeneous-agent model, distributional effects,
    JEL: D8 K4 Z13
    Date: 2015–11–04
  4. By: Theodore Figinski (U.S. Department of the Treasury); David Neumark (University of California–Irvine, National Bureau of Economic Research, Institute for the Study of Labor)
    Abstract: Reductions in the implicit taxation of Social Security benefits from reducing or eliminating the Retirement Earnings Test (RET) are an appealing – and in many cases successful – means of encouraging labor supply of older individuals receiving benefits. The downside, however, is that the same policy reforms can encourage earlier claiming of Social Security benefits, which permanently lowers benefits paid in the future. Depending on the magnitude of the effects on earnings and how households or individuals adjust their consumption and savings decisions, the net effect can be lower incomes at much older ages well beyond when people have retired. We explore the consequences of the 2000 reforms eliminating the RET from the Full Retirement Age to age 69 for the longer-run evolution of income, focusing in particular on the incidence of low income among older women, who are more likely to have become dependent mainly on income from their Social Security benefits. We find that the elimination of the RET increased the likelihood of having low incomes among women in their mid-70s and older – ages at which the lower benefits from claiming earlier outweigh possibly higher income in the period when women or their husbands increased their labor supply.
    Date: 2015–09
  5. By: Marco Angrisani (University of Southern California); Arie Kapteyn (University of Southern California); Erik Meijer (University of Southern California)
    Abstract: This paper studies to what extent job characteristics such as physical and cognitive demands, use of technologies, responsibility, difficulty, stress, peer pressure, and relations with co-workers are related to full or partial retirement. We study employment transitions and retirement expectations of older workers by exploiting the wealth of information about individuals older than age 50 in the Health and Retirement Study (HRS), and characteristics of different occupations provided by the Occupation Information Network (O*NET) database. Controlling for basic demographics, wages, benefits, health, cognitive ability, personality, and other personal characteristics, we find strong and statistically significant relationships between labor force transitions and job characteristics. These relationships are typically more pronounced and more precisely estimated when we use objective job attributes taken from the O*NET than when we use self-reported job characteristics taken from the HRS, but self-reported characteristics are more strongly related to moves from full-time to part-time employment. Using expected retirement age or subjective probabilities of working full-time at older ages gives similar results to using actual labor force transitions as the dependent variable. The estimated effects of job characteristics are again stronger and more robust to alternative specifications when measures of job attributes are taken from the O*NET than from the HRS. Our findings suggest that nonmonetary job characteristics are important determinants of labor supply decisions at older ages, but our analysis is still preliminary in its attempt to uncover causal relationships: Unobservable individual characteristics responsible for sorting into specific occupations may also shape retirement decisions.
    Date: 2015–09
  6. By: Laps, Jochen
    Abstract: The paper analyzes the welfare consequences of insuring mortality risk by means of standard, fully funded Social Security pensions when individuals wish to make transfers to their heirs. In the presence of uninsured mortality risk, within-family transfers depend on realized lifespan. While crowding out private transfers, Social Security provides transfer insurance and insurance of the ex ante risk of future generations inheriting a particular amount of transfer wealth. We find that, once ex ante insurance is taken into account, Social Security is welfare improving over the long-run as long as capital is not too productive and the transfer motive is not too strong. Altruists gain far less from Social Security than egoists.
    Keywords: Uninsured mortality risk; social security pensions; bequest motive; bequest insurance
    Date: 2015–11–06
  7. By: Dimitris Christelis; Raquel Fonseca Benito
    Abstract: We study transitions in and out of self-employment of older individuals using internationally comparable survey data from 13 OECD countries. We compute selfemployment transitions as conditional probabilities arising from a discrete choice panel data model. We examine the influence on self-employment transitions of labor market policies and institutional factors (employment protection legislation, spending on employment and early retirement incentives, unemployment benefits, strength of the rule of law), as well as individual characteristics like physical and mental health. Selfemployment is strongly affected by government policies: larger expenditures on employment incentives impact it positively, while the opposite is true for expenditures on early retirement and unemployment benefits.
    Keywords: self-employment, transitions, ageing, labor policies, panel,
    JEL: J21 J24 C4
    Date: 2015–11–04
  8. By: Emma Aguila (University of Southern California); Alma Vega (University of Pennsylvania)
    Abstract: For decades scholars have attempted to understand the effects of immigration on the U.S. Social Security system. To date, this research has been primarily limited to migrants in the U.S. and does not consider those who return to their countries of origin. Immigrants often pay OASDI taxes using illegitimate Social Security numbers and may return to their home countries without collecting U.S. Social Security benefits. In this study, we analyze the socioeconomic and labor characteristics, health, migration histories, and transitions to retirement of male Mexican return migrants who contributed to the U.S. Social Security system. Using the 2003 and 2012 Mexican Health and Aging Study (MHAS), we find that in 2012, 32 percent of male return migrants reported having contributed to the U.S. Social Security system but only five percent of those who contributed, received or expected to receive benefits. Those who reported having contributed were more likely to have completed college, spent more years in the U.S., and were more likely to be U.S. citizens or legal permanent residents than those who did not contribute. We also find that return migrants who spent one to nine years in the U.S. had a lower probability of transitioning to retirement between 2003 and 2012 than those had never been to the U.S. In contrast, those who spent 20 or more years in the U.S. had a higher probability of transitioning to retirement.
    Date: 2015–09
  9. By: Congressional Budget Office
    Abstract: This report presents additional information about CBO’s long-term projections of revenues and outlays for Social Security and provides information on Social Security benefits and payroll taxes for people born in different years and at different earnings levels. CBO has made a number of changes in the presentation and methodology of its distributional estimates since last year’s report. Lifetime Social Security benefit-to-tax ratios are higher this year as a result of those changes.
    JEL: H55 H60 H68 J26
    Date: 2014–12–18
  10. By: Niimi, Yoko
    Abstract: This paper examines the impact of providing informal care to elderly parents on caregivers' subjective well-being using unique data from the "Preference Parameters Study" of Osaka University, a nationally representative survey conducted in Japan. The estimation results indicate heterogeneous effects: while informal elderly care does not have a significant impact on the happiness level of married caregivers regardless of whether they take care of their own parents or parents-in law and whether or not they reside with them, it has a negative and significant impact on the happiness level of unmarried caregivers who take care of their parents outside their home. These findings shed light on the important role that formal care services could play in reducing the burden on caregivers, particularly unmarried caregivers who presumably receive less support from family members.
    Keywords: Aging; Caregiving; Elderly Care; Happiness; Informal Care; Japan; Long-term Care Insurance; Parental Care; Subjective Well-being
    JEL: D10 I18 I31 J14
    Date: 2015–11–12
  11. By: James Mabli; Nicholas Redel; Rhoda Cohen; Erin Panzarella; Mindy Hu; Barbara Carlson
    Abstract: The Title III-C Nutrition Services Program (NSP), administered by the Administration on Aging (AoA) within the Administration for Community Living of the U.S. Department of Health and Human Services (DHHS) under the Older Americans Act (OAA), represents a key component of America’s strategy for ensuring that the health and social needs of older adults are adequately met.
    Keywords: Title III-C, NSP, congregate meals, home-delivered meals, OAA, ACL
    JEL: I0 I1
    Date: 2015–09–30
  12. By: Jessica Ziegler; Nicholas Redel; Linda Rosenberg; Barbara Carlson
    Abstract: The Nutrition Service Programs (NSP), administered by the Administration on Aging (AOA) within the Administration for Community Living (ACL) of the U.S. Department of Health and Human Services (DHHS) under the Older Americans Act (OAA), represents a key component of America’s strategy for ensuring that the health and social needs of older adults are adequately met.
    Keywords: ENSP Program Costs Analysis
    JEL: I0 I1
    Date: 2015–09–25
  13. By: Hyatt, James A.
    Keywords: Education, Higher Education, pension reform
    Date: 2015–11–10
  14. By: Huang, Wei (Harvard University); Luo, Mi (New York University)
    Abstract: People may have imperfect information about their health status and thus make suboptimal decisions in insurance participation. Using national representative samples of the elderly in US and China, we find that people with lower socio-economic status and poorer health are relatively less likely to realize how unhealthy they are and this overconfidence is associated with no insurance participation. Accurate health information provided through physical examinations induces relatively higher participation among the overconfident people afterwards. These findings contribute a new explanation for the insufficient participation and advantageous selection in health insurance, and provide new insights on the insurance market and policy suggestions.
    Keywords: overconfidence, health, health insurance participation
    JEL: I12 I13 J14
    Date: 2015–11
  15. By: Racelis, Rachel H.; Abrigo, Michael Ralph M.; Salas, J.M. Ian S.; Herrin, Alejandro N.
    Abstract: This paper has two parts. The first part presents and discusses the 2011 Philippine National Transfer Accounts (NTA) estimates for selected flow accounts components, the most recent estimates available for the country, and compares the 2011 to the 1991 and 1999 estimates. The second part, also covering the years 1991, 1999, and 2011, examines change in Philippine population age structure, discusses economic gains from population change and the implications of economic lifecycle change on the economic gain. In the first part, more recent information about the economic lifecycle of Filipinos is provided from the 2011 NTA: age profiles of consumption and labor income (and their components) for the year 2011, and which population age groups incurred lifecycle deficit and the sizes of the aggregate deficits. The 2011 Philippine NTA national level estimates for per capita consumption and labor income age profiles are also compared to corresponding components of the 1991 and 1999 NTA estimates to determine the general directions and relative sizes of change over time. In the second part of the paper, findings about the per capita age profiles from the first part are used. The changes in the age structure of the Philippine population over the three years are also examined in the second part. There is potential for economic gain resulting from population change, more specifically from an increasing proportion of the population in the working ages--the phenomenon often referred to as the first demographic dividend. The effects of change in the population age structure and change in the economic lifecycle on economic gain are examined in the second part of the paper in two ways: using aggregate flows estimates of the NTA for the three years and using economic support ratios as defined in the NTA also computed for the three years.
    Keywords: Philippines, National Transfer Accounts, economic lifecycle, lifecycle deficit, consumption age profile, labor income age profile, demographic dividend
    Date: 2015

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