nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒01‒03
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The impact of easy and early access to old-age benefits on exits from the labour market: a macro-micro analysis By Ewa Galecka-Burdziak; Marek Góra
  2. Do Workplace Pensions Crowd Out Other Retirement Savings? Evidence from Canadian Tax Records By Messacar, Derek
  3. Local economic strategies for ageing labour markets: The Life Skills project in Neath Port Talbot and Swansea, West Wales, UK By Chris Ball
  4. Local economic strategies for ageing labour markets: Marijampolė's Third Age University in Lithuania By Simonas Gausas; Lina Vosyliūtė
  5. Local economic strategies for ageing labour markets: Management practices for productivity gains of older workers By Nicola Duell
  6. Local economic strategies for ageing labour markets: The Canadian Targeted Initiative for Older Workers in Fort St. James, British Columbia By Peter Hicks
  7. Disability Benefit Generosity and Labor Force Withdrawal By Mullen, Kathleen; Staubli, Stefan
  8. Age Features of a Happy Life in Russia and Europe: An Econometric Analysis of Socio-Economic Determinants By Elena Kopnova; Lilia Rodionova
  9. Longevity Risk Transfer activities by European insurers and pension funds By Patty Duijm
  10. Declining Trends in the Real Interest Rate and Inflation: Role of aging By FUJITA Shigeru; FUJIWARA Ippei

  1. By: Ewa Galecka-Burdziak (Warsaw School of Economics); Marek Góra (Warsaw School of Economics)
    Abstract: We analyse whether easy and early access to old-age benefits tempts workers to become inactive. We examine the impact of old-age benefits in the light of the discouraged worker effect in Poland, a country severely experiencing the problem of population ageing. We identify cyclical properties in activity and discouraged worker rates, and estimate a set of logistic regressions to identify the determinants of exits from the labour market. In the macro analysis, the added worker effect prevails over the discouraged worker effect. The discouraged worker effect arises with a delay of a few quarters. This process is asymmetric; in duration for females and in size for males. Females often permanently leave the market, and males more likely leave the market in downturns than re-enter in expansions. In a micro perspective, if the old-age benefit becomes the main source of income for the worker within a 1-year interval, the worker is 8 to 20 times more likely to leave the workforce compared to those who receive unemployment benefits or social welfare benefits. Thus, our findings are in favour of a higher retirement age, understood as the age when workers become eligible for the old-age benefits.
    Date: 2015–12
  2. By: Messacar, Derek
    Abstract: This paper investigates whether registered pension plans (RPPs) help households prepare financially for retirement or simply substitute for other forms of private saving. This issue is addressed using a panel of 1.8 million Canadian households, from 1991 to 2010, which appear in the Longitudinal Administrative Databank. The analysis controls for correlations in savings across accounts due to unobserved tastes for saving by exploiting the fact that employer contribution rates increase discontinuously on earnings above the average industrial wage, a unique feature of occupational pensions in Canada, the effect being estimated in a Regression Kink Design.
    Keywords: Income, pensions and wealth, Income, pensions, spending and wealth, Pension plans and funds and other retirement income programs, Seniors, Work and retirement
    Date: 2015–12–21
  3. By: Chris Ball
    Abstract: This working paper examines the local initiatives in Neath, Port Talbot and Swansea in South West Wales to re-integrate elderly economically inactive workers into the local labour market. The core initiative analysed is the Life Skills for Older People Project, which works with local and regional governments to provide customised education and training for job seekers and the long-term unemployed aged 50 or above. The analysis of the economic impact and the achievements of the project found that custom support and personal development were effective in empowering older workers to re-enter work in the private and voluntary sector. The role of South West Wales’ industrial past in shaping the education and skills profile of older workers is also examined.
    Date: 2015–12–23
  4. By: Simonas Gausas; Lina Vosyliūtė
    Abstract: This paper analyses local employment strategies for shrinking and ageing labour markets through the case study of two local initiatives in Marijampolé, Lithuania. Drawing from desk research, quantitative analysis and primary interviews, the paper determines the effectiveness of Marijampolé’s Third Age University and the Petras Kriaučiūnas Public Library in re-training older workers to improve professionalism, entrepreneurialism and skills development, particularly in information and communication technologies. The analysis also draws synergies between national, regional and local strategies to reskill the Lithuanian labour market to outline appropriate strategy and implementation recommendations for policy makers.
    Date: 2015–12–23
  5. By: Nicola Duell
    Abstract: This paper analyses the efficacy of firm-level management practices in incorporating and retaining older workers. The paper notes that there are significant barriers to the integration of older workers into firms, and then outlines specific tools that could be used to enable older workers to contribute to enterprises. The OECD LEED Programme analysed age management practices in workplaces and found that a multi-faceted approach that targets multiple dimensions of the working experience of older workers should be pursued. Preserving flexibility, job training opportunities and mobility for older workers to a similar degree as the broader workforce is also encouraged.
    Date: 2015–12–23
  6. By: Peter Hicks
    Abstract: This working paper examines the impacts of the Canadian employment strategy, the Targeted Initiative for Older Workers, in the Fort St. James community in north-central British Columbia. The paper notes that older workers are generally well employed at the aggregate level in Canada, but may face specific challenges in local and vulnerable communities. An examination of the design of this project highlights the need for clear objectives, eligibility criteria, local sponsors and group-based support. In the context of the Fort St. James Community, participants and administrators highlighted the efficacy of custom and individual support in creating better outcomes for older workers.
    Date: 2015–12–23
  7. By: Mullen, Kathleen (RAND); Staubli, Stefan (University of Calgary)
    Abstract: A key component for estimating the optimal size and structure of disability insurance (DI) programs is the elasticity of DI claiming with respect to benefit generosity. Yet, in many countries, including the United States, all workers face identical benefit schedules, which are a function of one's labor market history, making it difficult to separate the effect of the benefit level from the effect of unobserved preferences for work on individuals' claiming decisions. To circumvent this problem, we exploit exogenous variation in DI benefits in Austria arising from several reforms to its DI and old age pension system in the 1990s and 2000s. We use comprehensive administrative social security records data on the universe of Austrian workers to compute benefit levels under six different regimes, allowing us to identify and precisely estimate the elasticity of DI claiming with respect to benefit generosity. We find that, over this time period, a one percent increase in potential DI benefits was associated with a 1.2 percent increase in DI claiming.
    Keywords: disability insurance, benefit generosity, labor force withdrawal, claiming elasticity
    JEL: H55 J14 J22
    Date: 2015–12
  8. By: Elena Kopnova (National Research University Higher School of Economics); Lilia Rodionova (National Research University Higher School of Economics)
    Abstract: A comparative analysis of the age impact on happiness in Russia and European countries was conducted. The European Social Survey data in 2012 for 29 countries were used. On the basis of an ordered logistic regression, a U-shape relationship between age and happiness was obtained for some of the analysed countries. By using cluster analysis, the countries were divided into 3 groups, in which the age effect varies greatly. In the counties of group 1 (for example, Iceland and Norway) happiness did not change at any age or increase smoothly in old age. Group 2 (Germany and France) had a clear U-shaped age-happiness form. Russia and some counties of former Soviet Union: Ukraine, Lithuania and Estonia were analysed in group 3, where the level of happiness decreased significantly in old age (over 60). In some countries (Belgium, Switzerland, Cyprus, Denmark, Finland, Israel, Italy, Sweden) all people were happy, regardless of age and the assumption of age-happiness U-shape relation was not found.The socio-economic determinants of happiness were also analysed in different age groups. Income satisfaction and subjective health were the more significant characteristics.
    Keywords: satisfaction, happiness, econometric modelling, age groups.
    JEL: C35 C38 I31
    Date: 2015
  9. By: Patty Duijm
    Abstract: Longevity risk, the risk that people live longer than expected, can have 7 a significant financial effect on pension funds and insurance companies. To manage this risk, these parties can transfer such risks to other parties, such as (re)insurers, investment banks and capital markets. In this study, Longevity Risk Transfer (LRT) activities are defined as those activities where financial instruments are used to transfer longevity risk to third parties. This study presents the initial results of a survey on LRT activities by European insurance companies and pension funds and aims to better understand the developments in this market and the related risks. In total, 26 countries participated in this questionnaire. The outcomes show that the market for LRT products has grown rapidly, but is still concentrated in just a few countries. LRT activities are most developed in countries with private Defined Benefit (DB) pension schemes. Countries that mainly have state pensions have less LRT activities as governments do not tend to transfer longevity risk in this manner. From a policy perspective, attention should be given to where the longevity risk is transferred to. Especially in a growing market monitoring of the holders of longevity risk is important as (i) LRT deals between banks, (re)insurers etc. could lead to increased interconnectedness and hence to more contagion during times of stress and; (ii) further growth in the market for LRT instruments could lead to a build-up of large tail risk exposure (e.g. in case of a cure for cancer).
    Date: 2015–10
  10. By: FUJITA Shigeru; FUJIWARA Ippei
    Abstract: This paper explores a causal link between the aging of the labor force and declining trends in the real interest rate and inflation in Japan. We develop a new Keynesian search/matching model that features heterogeneities in age and firm-specific skill levels. Using the model, we examine the long-run implications of the sharp drop in labor force entry in the 1970s. We show that the changes in the demographic structure driven by the drop induce significant low-frequency movements in per-capita consumption growth and the real interest rate. They also lead to similar movements in the inflation rate when the monetary policy rule follows the standard Taylor rule, failing to recognize the time-varying nature of the natural rate of interest. The model suggests that the aging of the labor force accounts for roughly 40% of the decline in the real interest rate observed between the 1980s and 2000s in Japan.
    Date: 2015–12

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