nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒02‒23
twelve papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Policy Uncertainty and the Cost of Delaying Reform: A case of aging Japan By KITAO Sagiri
  2. Aging in Europe: Reforms, international diversification and behavioral reactions By Börsch-Supan, Axel; Härtl, Klaus; Ludwig, Alexander
  3. Medicare Expenditures, Social Security Reform, and the Labor Force Participation of Older Americans By Yuanyuan Deng; Hugo Benítez-Silva
  4. The Analysis of Population Aging Phenomena in Poland in Spatial Perspective By Justyna Wilk; Michal Bernard Pietrzak
  5. Modele wielosektorowej polityki społecznej wobec ludzi starych i starości w kontekście zmiany technologicznej By Klimczuk, Andrzej
  6. Old before their time: The role of employers in retirement decisions By Piera Bello; Vincenzo Galasso
  7. The Prodigal Son: Does the Younger Brother Always Care for His Parents in Old Age? By Komura, Mizuki; Ogawa, Hikaru
  8. Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms By Chiara Rosazza-Bondibene; Alex Danzer; Peter Dolton
  9. The "Costs" of Informal Care: An Analysis of the Impact of Elderly Care on Caregivers' Subjective Well-being in Japan By Niimi, Yoko
  10. Social insurance with competitive insurance markets and risk misperception By Cremer, Helmuth; Roeder, Kerstin
  11. Longévité différentielle et redistribution : enjeux théoriques et empiriques By Marie-Louise Leroux; Pierre Pestieau; Grégory Ponthière
  12. Health Capacity to Work at Older Ages: Evidence from Spain By Pilar García Gómez; Sergi Jiménez-Martín; Judit Vall-Castello

  1. By: KITAO Sagiri
    Abstract: In an economy with aging demographics and a generous pay-as-you-go social security system established decades ago, reform to reduce benefits is inevitable unless there is a major increase in taxes. Often times, however, there is uncertainty about the timing and structure of reform. This paper explicitly models policy uncertainty associated with a social security system in an aging economy and quantifies economic and welfare effects of uncertainty as well as costs of delaying reform. Using the case of Japan, which faces the severest demographic and fiscal challenges, we show that uncertainty can significantly affect economic activities and welfare. Delaying reform or reducing its scope involves a sizeable welfare tradeoff across generations, in which middle to old-aged individuals gain the most at the cost of young and future generations.
    Date: 2016–02
  2. By: Börsch-Supan, Axel; Härtl, Klaus; Ludwig, Alexander (Munich Center for the Economics of Aging (MEA))
    Abstract: The extent of demographic changes in Europe and Asia is much more drastic than in the US. This paper studies the effects of population aging on the interactions between economic growth and living standards in Europe with labor market and pension reform, behavioral adaptations, and international capital flows. Our analysis is based on an overlapping generations model with behavioral reactions to reform which is extended to the multi-country situation typical for Europe. While the negative effects of population aging on growth in Europe can in principle be compensated by reforms and economic adaptation mechanisms, they may be partially offset by behavioral reactions.
    JEL: J11 J21 D13 E27 H55 F16 F21
    Date: 2014–05–15
  3. By: Yuanyuan Deng (Stony Brook University); Hugo Benítez-Silva (Stony Brook University)
    Abstract: The changes to the Social Security Old Age benefits system introduced in the last decade, which will continue later this decade, have impacted individuals' labor supply and retirement decisions, and therefore their health insurance coverage. This paper provides an empirical analysis of the effects of the changes in the OA system, resulting from the 1983 Amendments, on Medicare costs. Using data from the Medicare Current Beneficiary Survey (MCBS), we empirically analyze the Medicare expenditures of individuals around retirement age as a function of their health insurance coverage and labor market attachment. Our results show a significant effect of employment measures as well as insurance coverage types, suggesting a sizable effect of employment and insurance on Medicare expenditures as well as on total health expenditures and on out-of-pocket health expenditures. Our findings allow us to compute the total savings to the Medicare system resulting from individuals' working while receiving health insurance coverage at older ages, and we estimate savings of 2.89 billion dollars a year, as well as another 333.67 million per year resulting from the delayed in enrollment into the Medicare system, given that some individuals do not enrolled in Medicare when first available, and this is more common among those who work and have insurance coverage. These results suggest that any future reform to the social insurance system will have to account for the effect on Medicare costs of policies that likely lead to increases in employment and employer provided health insurance coverage among populations eligible for Medicare.
    Date: 2015–09
  4. By: Justyna Wilk (Wroclaw University of Economics, Poland); Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland)
    Abstract: The processes of socio-economic development are continuously accompanied by the process of population aging. It is seen as a growing of the percentage share of people aged 65 and over in the general population. It covers the majority of European Union countries and also refers to Poland. The objective of the paper is to analyze the population aging phenomenon in spatial perspective. The study was carried out for 66 subregions (NUTS 3) and covered the period 1995-2012. Poland is characterized by a strong spatial diversification regarding the senior citizens share and its growth rate, and also determinants exerting impact on the demographic aging processes. The demographically youngest and slowest aging population lives in south-eastern and also central Poland. The most intensive population aging processes are seen in the selected subregions of south-western Poland. Here, we observe extremely low fertility, demographically old working-age population and also significant migration outflow of younger people.
    Keywords: population aging, socio-economic development, spatial approach, taxonomic analysis, regression analysis
    JEL: C38 C51 J11
    Date: 2014–03
  5. By: Klimczuk, Andrzej
    Abstract: POLISH: Starzenie się społeczeństw stanowi wyzwanie, które wymaga horyzontalnej polityki społecznej. Polityka ta powinna uwzględniać zróżnicowanie osób starszych, a w związku z tym opracowywać i wdrażać wiele odmiennych działań skierowanych do tej grupy. Ponadto powinna zwracać uwagę na wizerunek starości w społeczeństwie. Złożoność negatywnych konsekwencji starzenia się sprawia, iż kluczowe jest wzmocnienie współpracy podmiotów publicznych, komercyjnych, pozarządowych i nieformalnych na wszystkich poziomach organizacji polityki społecznej. Niniejsze opracowanie ma na celu przybliżenie modeli wielosektorowej polityki społecznej oraz podkreślenie możliwości integracji usług społecznych. Artykuł wskazuje na szanse i zagrożenia dla tej integracji, ze szczególnym uwzględnieniem zagadnień „srebrnej gospodarki”, wykluczenia cyfrowego i robotycznego. W podsumowaniu pokazano możliwości rozwoju innowacji społecznych oraz kierunki dalszych badań. ENGLISH: Ageing is a challenge that requires development and implementation of horizontal social policy, which should take into account the diversity of older adults and the division of interventions aimed at this population and on the image of old age. The complexity of the negative consequences of ageing shows that there is a need to enhance cooperation between the public sector, the commercial sector, the NGO sector, and the informal sector at all levels of social policy. The paper discusses models of multisectoral social policy and the possibilities of integrating social services. Its conclusions include directions for further research and social innovation.
    Keywords: koprodukcja, wykluczenie robotyczne, srebrna gospodarka, usługi społeczne, welfare mix, welfare pluralism, gospodarka społeczna, co-production, robotics divide, silver economy, social services, welfare mix, welfare pluralism, social economy
    JEL: H75 I38 J14 Z18
    Date: 2015
  6. By: Piera Bello; Vincenzo Galasso
    Abstract: Do elderly workers retire early voluntarily, or are they induced (or even forced) by their employees? To establish the relevance of the labor demand component in retirement decisions, we consider a trade liberalization between Switzerland and the EU – the Mutual Recognition Agreement (MRA). A vast literature suggests that these trade liberalizations induce firms to relocate and to restructure, with large compositional effects on the labor market particularly for the elderly workers, who face higher mobility costs. Using Swiss Labor Force Survey data, we use a difference in differences approach to compareearly retirement behavior in three periods (pre-liberalization, announcement, and implementation) for three groups of industries. MRA industries represent our treatment group; control groups are non-MRA manufacturing industries, and services. Our empirical results show that elderly workers are more likely to retire early in the MRA sector during the announcement period, and that the employment of young (30-years old) male workers increases. The distribution of wages by age is instead unaffected. Additional empirical evidence using Swiss Business Census and UN Comtrade data suggests that the increase in early retirement in MRA is not explained by more firms’ exits, nor by more early retirement among the exiting firms. It is rather the surviving MRA firms, which react to the increase in competition by adjusting their labor force and use more early retirement.
    Date: 2016
  7. By: Komura, Mizuki (Nagoya University); Ogawa, Hikaru (University of Tokyo)
    Abstract: Studies have shown that the older sibling often chooses to live away from his elderly parents intending to free ride on the care provided by the younger child. In the presented model, we incorporate income effects and depict a different pattern frequently observed in Eastern countries; that is, the older sibling lives near his or her parents and takes care of them in old age. By generalizing the existing model, we show three cases of elderly parents being looked after by (1) the older sibling, (2) the younger sibling, and (3) both siblings, depending on the relative magnitude of the income effect and the strategic incentive for one sibling to free ride on the other. Our study also investigates the effect of changes in relative income on the level of total care received by parents.
    Keywords: location choice, income effect, sibling, elderly care arrangement
    JEL: H41 J17
    Date: 2016–02
  8. By: Chiara Rosazza-Bondibene; Alex Danzer; Peter Dolton
    Abstract: Radical changes have been implemented to pension schemes across the UK public sector from April 2015. This paper simulates how these changes will affect the lifetime pension and how the negotiated pension changes compare across six public sector schemes. Specifically, we simulate the occupation specific Defined Benefit (DB) pension wealth accumulated for a representative employee over the lifecycle by factoring in the recent changes to pension conditions. We find that the Local Government employees and the Civil Service are the ‘winners’ having maintained or secured an increase in the value of their pension of between 19-43%. This is in sharp contrast to the Police and Firefighters who have lost around 50% and Teachers and NHS workers who have lost 25-28% of the value of their pensions.
    Date: 2015–12
  9. 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, ElderlyCare, Happiness, InformalCare, Japan, Long-term Care Insurance, ParentalCare, Subjective Well-being
    JEL: D10 I18 I31 J14
    Date: 2015–11
  10. By: Cremer, Helmuth; Roeder, Kerstin
    Abstract: This paper considers an economy where individuals differ in productivity and in risk. Rochet (1991) has shown that when private insurance markets offer full coverage at fair rates, social insurance is desirable if and only if risk and productivity are negatively correlated. This condition is usually shown to be satisfied for many health risks, but it appears to be violated for the old age dependency risk (mainly because longevity in turn is positively correlated with productivity). We examine the role of uniform and nonuniform social insurance to supplement a general income tax when neither public nor private insurers can observe individual risk and when it is positively correlated with wages. Consequently, a Rothschild and Stiglitz (1971) equilibrium emerges in the private insurance market and low-wage/low-risk individuals are not fully insured. We show that even when social insurance provided to the poor has a negative incentive effect, it also increases their otherwise insuficient insurance coverage. Social insurance to the rich produces exactly the opposite effects. Whichever of these effects dominates, some social insurance is always desirable. Finally, we introduce risk misperception which exacerbates the failure of private markets. The insurance term now reflects the combined failure brought about by adverse selection and misperception. Now the low-risk individuals are not only underinsured, but also pay a higher than fair rate. However, and rather surprisingly, it turns out that this does not necessarily strengthen the case for public insurance.
    Date: 2016–01
  11. By: Marie-Louise Leroux (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi - Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi); Pierre Pestieau (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, CEPR - Center for Economic Policy Research - CEPR, TSE - Toulouse School of Economics - Toulouse School of Economics); Grégory Ponthière (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - 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, UPE - Université Paris-Est)
    Abstract: Dans cet article, nous étudions l'impact des différences de longévité sur la conception des politiques publiques, en particulier celles liées au départ à la retraite. Nous montrons premièrement qu'alors même que l'espérance de vie a augmenté de manière très importante tout au long du siècle dernier, il subsiste encore de fortes disparités. Deuxièmement, nous étudions d'un point de vue normatif comment les différences de longévité sont généralement prises en compte dans les modèles de cycle de vie et montrons que certaines hypothèses peuvent avoir des implications fortes en terme de redistribution intra-générationnelle. Nous identifions au moins trois arguments en faveur d'une redistribution vers les agents à faible longévité: l'aversion à l'inégalité intertemporelle, l'aversion au risque de mortalité et la compensation pour des caractéristiques dont les agents ne sont pas responsables. Nous étendons ensuite notre analyse de manière à tenir compte du fait que les individus puissent être, en partie, responsables de leur longévité. Finalement, nous lions ces résultats aux débats actuels sur la réforme des systèmes de retraite. Nous montrons qu'en général, parce que les pensions de retraite sont conditionnelles à la survie des bénéficiaires, les systèmes de retraite publics vont redistribuer des ressources des agents dont la durée de vie est courte vers ceux dont la durée de vie est longue. Nous fournissons des pistes de réformes qui viseraient à mieux prendre en compte ces différences de longévité et en particulier, celles relatives à la création d'une "rente longévité" telle que souhaitée par le Comité d'Amours et au développement de l'assurance autonomie, qu'elle soit privée ou publique.
    Keywords: Systèmes de retraite,Mortalité différentielle
    Date: 2014–10
  12. By: Pilar García Gómez; Sergi Jiménez-Martín; Judit Vall-Castello
    Abstract: In a world with limited PAYGO financing possibilities this paper explores whether older Spanish individuals have the health capacity to work longer. For that purpose we use Milligan-Wise and Cutler-Meara Cutler-Meara-Richards-Shubik simulation methods. Our results suggest that Spanish workers have significant additional capacities to extend their working careers.
    Keywords: work capacity, Retirement, Health
    JEL: J11 J26 I12 I18
    Date: 2016–02

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