nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒03‒06
seventeen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Economics of Healthy Ageing in China By Heshmati, Almas
  2. Ageing and the Skill Portfolio: Evidence from Job Based Skill Measures By Audra J. Bowlus; Hiroaki Mori; Chris Robinson
  3. Gender inequalities in pensions: Are determinants the same in the private and public sectors? By Carole Bonnet; Dominique Meurs; Benoît Rapoport
  4. The quality of demographic data on older Africans By Sara Randall; Ernestina Coast
  5. Changements démographiques au Québec : vers une décroissance de l’emploi d’ici 2050? By Luc Bissonnette; David Boisclair; François Laliberté-Auger; Steeve Marchand; Pierre-Carl Michaud
  6. Accounting of pay-as-you-go pension schemes using accrued-to-date liabilities: An example for Switzerland By Metzger, Christoph
  7. Inequalities of income and inequalities of longevity: a cross-country study By Eric Neumayer; Thomas Plümper
  8. Health Capacity to Work at Older Ages: Evidence from Spain By Pilar García-Gómez; Sergi Jiménez-Martín; Judit Vall Castello
  9. The Legacy of the Crisis: The Spanish Labour Market in the Aftermath of the Great Recession By Marcel Jansen; Sergi Jiménez-Martín; Lucía Gorjón
  10. Replacement migration from a labour market perspective : Germany's long-term potential labour force and immigration from non-EU member countries By Fuchs, Johann; Kubis, Alexander; Schneider, Lutz
  11. Household Savings: A Survey of Recent Microeconomic Theory and Evidence By Andrew Coleman
  12. Finanzierungsmöglichkeiten für Assistenzsysteme im Alter By Honekamp, Ivonne; Honekamp, Wilfried
  13. Differential Mortality and the Progressivity of Social Security? By Shantanu Bagchi
  14. The sustainability of Scottish public finances: a Generational Accounting approach By Katerina Lisenkova; Miguel Sanchez-Martinez; James Sefton
  15. Note on the Stock-Wise utility function used in their option-value analysis By Börsch-Supan, Axel
  16. Monitoring and Assessment Framework for the European Innovation Partnership on Active and Healthy Ageing (MAFEIP) First update of the process indicators By Fabienne Abadie; Maria Lluch; Ramon Sabes-Figuera; Bernarda Zamora
  17. Salience and Social Security Benefits By Brinch, Christian N.; Hernæs, Erik; Jia, Zhiyang

  1. By: Heshmati, Almas (Jönköping University, Sogang University)
    Abstract: Healthy ageing is a challenge for many countries with significant shares of elderly people. Literature refers to China's ageing population as a ticking time bomb which paradoxically is both a challenge and an opportunity for the country. Health is considered an important determinant of economic growth and competitiveness. The health of the elderly population determines its need for resources and care. Thus, investing in healthy ageing contributes to economic and social well-being. This study is a review of literature on the social and economic aspects of healthy ageing. It summarizes alternative approaches presented in literature to ease pressures of a rapidly growing ageing population. The main focus is on strategies for healthy ageing, policy practices and measures, organization, finances and manpower resources to promote healthy ageing in China. Up-to-date theories and methods applied to household surveys and population statistics are used to quantify the problem, resource requirements and estimating the social and economic benefits of having policies and measures for healthy ageing. Conclusions are drawn with respect to conditions of healthy ageing in China and about the state policy in this regard.
    Keywords: healthy ageing, ageing in China, active ageing, challenges and opportunities, economics of healthy ageing
    JEL: H75 I15 I18 I38 P36
    Date: 2016–02
  2. By: Audra J. Bowlus (University of Western Ontario); Hiroaki Mori (University of Western Ontario); Chris Robinson (University of Western Ontario)
    Abstract: The evolution of human capital over the life-cycle, especially during the accumulation phase, has been extensively studied within an optimal human capital investment framework. Given the ageing of the workforce, there is increasing interest in the human capital of older workers. The most recent research on wage patterns has adopted a new multidimensional skills/tasks approach. We argue that this approach is also well suited to the investigation of the evolution of the human capital of older workers. There is clear evidence that the typical concave Ben-Porath shape for a wage based single dimension human capital measure masks different shapes for the individual components in a multidimensional skill portfolio. Not all components evolve in the same way over the life-cycle. Some components of the skill vector are particularly sensitive to ageing effects for older workers, but this sensitivity is under-estimated using occupation level rather than individual level skill observations. The evidence suggests that workers can and do adjust their skill portfolios in various ways as they approach retirement and that the decline in skills is not purely driven by selection.
    Keywords: Ageing; Skills; Human Capital
    Date: 2016
  3. By: Carole Bonnet; Dominique Meurs; Benoît Rapoport
    Abstract: While the average gender gap in pensions is quite well documented, gender differences in the distribution of pensions have rarely been explored. We show in this paper that pension dispersion is very similar for men and women within the French pension system of a given sector (public or private). However, the determinants of these gender inequalities are not the same. Using a regression-based decomposition of the Gini coefficient, we find that pension dispersion is mainly due to dispersion of the reference wage. Gender differences are less marked among civil servants. For women, pension dispersion is also due to dispersion in contribution periods. We also decompose the Gini coefficient by source of income to measure the impact of institutional rules on the extent of pension inequality. Unexpectedly, we find that the impact of pension minima is limited, although slightly larger for civil servants than for private sector employees.
    Keywords: Pension, Private and Public sector, Gender gap, Gini coefficient, Decomposition.
    JEL: J14 J16 H55
    Date: 2016
  4. By: Sara Randall; Ernestina Coast
    Abstract: BACKGROUND Developing appropriate and equitable policies for older people in Africa requires accurate and reliable data. It is unclear whether existing data can accurately assess older African population structures, let alone provide the detailed information needed to inform policy decision making. OBJECTIVE To evaluate the quality of nationally representative data on older Africans through examining the accuracy of age data collected from different sources. METHODS To measure the accuracy of age reporting overall we calculate Whipple’s Index, and a modified Whipple’s Index for older adults, using the single year age-sex distributions from (a) the household roster of 17 Demographic and Health Surveys (DHS) (b) the censuses of 12 of these countries and (c) the Living Standards Measurement Study (LSMS) for Ethiopia and Niger. We compare reported sex ratios by age. RESULTS The quality of age data is very poor for most countries outside Southern Africa, especially for older adults. In some Sahelian countries DHS surveys appear to omit a considerable proportion of older women. Data on population structure of older people by age and sex produced by the DHS and the census are inconsistent and contradictory. CONCLUSIONS Different field methodological approaches generate contradictory data on older Africans. With the exception of Southern Africa, it is impossible to assess accurately the basic demographic structure of the older population. The data available are so problematic that any conclusions about age-related health and welfare and their evolution over time and space are potentially compromised. This has ramifications for policy makers and practitioners who demand, fund and depend on large scale demographic data sources.
    JEL: C1
    Date: 2016
  5. By: Luc Bissonnette; David Boisclair; François Laliberté-Auger; Steeve Marchand; Pierre-Carl Michaud
    Abstract: Nous projetons le niveau d’emploi au Québec d’ici 2050 à l’aide d’un modèle qui simule la démographie et les comportements socio-économiques au niveau individuel. Ces résultats sont contrastés avec les projections effectuées par la Régie des rentes du Québec en 2013 et avec des projections qui maintiennent le niveau d’éducation et les comportements d’emploi inchangés. En dépit du vieillissement démographique qui fera diminuer la population en âge de travailler, les comportements récents sur le marché du travail suggèrent que le Québec aura droit à une hausse des taux d’emploi, surtout chez les travailleurs expérimentés. En conséquence, la croissance totale du niveau de l’emploi de 2015 à 2050 devrait être plus élevée que celle prévue. Nos résultats suggèrent que cette croissance permettra d’amoindrir légèrement les effets du vieillissement en soutenant la croissance économique.
    Keywords: , Emploi, projections, vieillissement, microsimulation, Québec
    JEL: C61 J11 J21
    Date: 2016–02–09
  6. By: Metzger, Christoph
    Abstract: Due to demographic change, the fiscal sustainability of pension schemes financed on a pay-as-you-go (PAYGO) basis is of more interest for policy makers than ever. Unsustainable financing brings along a future burden to pensioners through pension cuts and/or to the working population through increasing contribution rates. With comparable data about the unfunded accrued-to-date pension liabilities of social security pension schemes soon being available due to a recent update of the international System of National Accounts (2008 SNA), we present a simple framework for accounting of paygo pension schemes using these estimates of accrued-to-date liabilities. Additionally we incorporate another definition of liabilities, the current workers' and pensioners' net liabilities (CWL). Applying this accounting framework using both definitions of liabilities to the Swiss pension scheme (AHV), we show that financing of the AHV is unsustainable. In order to restore fiscal sustainability either an increase in the contribution rate to 12 percent or a cut in average pension levels of about 38 percent would be necessary.
    Keywords: accounting of pension schemes,accrued-to-date liabilities,supplementary table,fiscal sustainability
    JEL: E01 H55 H83 H87
    Date: 2016
  7. By: Eric Neumayer; Thomas Plümper
    Abstract: Objectives. We examined the effects of market income inequality (income inequality before taxes and transfers) and income redistribution via taxes and transfers on inequality in longevity. Methods. Life tables were used to compute Gini coefficients of longevity inequality for all individuals and for individuals that survived at least to the age of ten. Longevity inequality was regressed on market income inequality and income redistribution controlling for a range of potential confounders in a cross-sectional time-series sample of up to 28 predominantly Western developed countries and up to 37 years. Results. Income inequality before taxes and transfers is positively associated with inequality in the number of years lived, while income redistribution (the difference between market income inequality and income inequality after taxes and transfers have been accounted for) is negatively associated with longevity inequality in our sample. Conclusions. To the extent that our estimated effects based on observational data are causal, governments can reduce inequality in the number of years lived not only via public health policies, but also via their influence on market income inequality and the redistribution of incomes from the relatively rich to the relatively poor.
    JEL: N0
    Date: 2016–01
  8. 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.
    Date: 2016–02
  9. By: Marcel Jansen; Sergi Jiménez-Martín; Lucía Gorjón
    Abstract: The analysis is divided in three parts. The first part of the report offers descriptive evidence on the legacy of the crisis. It documents the incidence of unemployment by age, education, gender and duration and offers a comparison between Spain and the rest of the countries of the OECD. The reported evidence indicates that long-term unemployment is more pervasive and entrenched than elsewhere in the OECD. Fourteen percent of the civilian labour force is unemployed for more than a year and out of this group almost seventy percent is unemployed for more than two years. Moreover, we document a strong concentration of the longest unemployment spells among disadvantaged groups such as workers from the construction sector, the low-educated and older workers above fifty. In the second part of the report, we proceed with a formal econometric analysis to determine the relative importance of workers’ characteristics and the duration of unemployment for the observed job finding probabilities between 2007 and 2015. Finally, in the last part of the report we use longitudinal Social Security data to study the cumulative effects of the crisis for selected groups of workers.
    Date: 2016–02
  10. By: Fuchs, Johann (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Kubis, Alexander (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Schneider, Lutz
    Abstract: "We quantify the development of the potential labour force in Germany from 2014 to 2050 and pose the question as to which extent migration will be able to offset the well-known negative demographic influence. The mean overall results of this long period of time show that while migration may slightly dampen the trend, it cannot fully compensate for it, depending on the development of domestic labour participation. Persistently high immigration numbers, however, will defer the demographic caused decline of the workforce for some years. In contrast, even high, if realistic, immigration flows will only slow down demographic ageing." (Author's abstract, IAB-Doku) ((en))
    JEL: F22 J11 J21 J22
    Date: 2016–02–10
  11. By: Andrew Coleman (The Treasury)
    Abstract: This paper summarises recent theoretical and empirical developments in the vast literature that has examined the microeconomic determinants of household saving. It is designed as a primer to provide a basic understanding of some of the developments in the literature in the last decade. The paper uses the standard intertemporal optimising model as the basic organisational framework, and includes a discussion of precautionary savings, liquidity constraints and bequests. The empirical data is examined in light of this framework. Three key issues related to superannuation provision arise. First, evidence suggests that in most countries households continue to save after retirement. Second, in several countries there is evidence that most people hold very few financial assets at any stage of their lives, and a large number of people hold very few assets, either financial or real. Third, intergenerational transfers appear to provide a motive for the lack of consumption for many of the elderly, particularly the wealthy.
  12. By: Honekamp, Ivonne; Honekamp, Wilfried
    Abstract: The article identifies current and future funding opportunities of technical assistance systems for the elderly people. State or government-sponsored measures were examined to determine the funding. Results of future health economic evaluations of may facilitate the application of technical nursing aids to the responsible care insurance fund.
    Keywords: technical assistance systems; government-sponsored measures;
    JEL: D1
    Date: 2016–02–06
  13. By: Shantanu Bagchi (Department of Economics, Towson University)
    Abstract: I examine how strongly Social Security benefits should be linked to past work-life income, while accounting for the fact that the wealthy live longer than the poor. Using a general equilibrium macroeconomic model calibrated to the U.S. economy, I find that the optimal Social Security arrangement warrants benefits that are flat and completely unrelated to past work-life income. While this arrangement leads to higher implicit tax rates for high-income households, their welfare losses are relatively small, because Social Security's current tax structure is regressive: the marginal tax rate is zero above the taxable maximum. On the other hand, full insurance from unfavorable labor income shocks generates large welfare gains to the low- and medium-income households. Under this flat-benefit arrangement, Social Security benefits increase by as much as a factor of 17 for low-income households, and decline by as much as 40% for high-income households, but the overall size of Social Security remains unchanged.
    Keywords: Differential mortality, Social Security, taxable maximum, mortality risk, labor income risk, incomplete markets, general equilibrium.
    JEL: E21 E62 H55
    Date: 2016–02
  14. By: Katerina Lisenkova; Miguel Sanchez-Martinez; James Sefton
    Abstract: This paper analyses the long-term sustainability and intergenerational equity of the Scottish public finances by employing a generational accounting model. This represents a novel approach to analysing these issues in the case of Scotland, while having the advantage of capturing policy-relevant intergenerational aspects. We find that, under the baseline scenario, assuming that Scotland has “full fiscal autonomy”, large intertemporal and intergenerational fiscal gaps open up. The three main reasons behind this result are: declining North Sea revenues, a budget deficit at the beginning of the simulation period and a widening gap over time primarily due to population ageing. The model suggests that both the intertemporal fiscal and generational imbalances can be addressed via a permanent increase in taxes equivalent to about 8.5 per cent of Scottish GDP, levied on both living and future generations.
    Date: 2015–09
  15. By: Börsch-Supan, Axel (Munich Center for the Economics of Aging (MEA))
    Abstract: The option value of postponing retirement is the difference between the utility when retiring at the age that maximizes utility minus the utility when retiring now. This note shows that a utility function which depends only weakly on the value of leisure such as the utility function proposed by Stock and Wise (1990) and used in many applications (see Gruber and Wise, various issues) makes this difference flat relative to a more leisure-sensitive utility function. This explains the poor results observed in many European countries which have participated in the Gruber-Wise exercise where the option value was based on the Stock-Wise utility function and in which leisure (here: early retirement) is much more highly valued than in the United States.
    Date: 2014–10–01
  16. By: Fabienne Abadie (European Commission – JRC - IPTS); Maria Lluch; Ramon Sabes-Figuera (European Commission – JRC - IPTS); Bernarda Zamora
    Abstract: This report aims to provide information on the evolution of the Commitments that joined the EIP on AHA in the First Invitation for Commitment (June 2012) during the first months of the partnership by analysing the variation for the defined process indicators between the start of the project (June 2012) and spring 2013, the latter corresponding to the time when data was collected through a Monitoring Survey. The survey questions mirrored in general the information submitted by participants through the First Invitation for Commitment, although not all questions were phrased and/or formatted in the same way, which complicates somewhat the comparison of the two data sets.
    Keywords: EIP, Active and Healthy Ageing, EIP on AHA, indicators, monitoring, framework
    JEL: I11 I18 O33 O38
    Date: 2014–08
  17. By: Brinch, Christian N. (BI Norwegian School of Business); Hernæs, Erik (The Ragnar Frisch Centre for Economic Research); Jia, Zhiyang (Statistics Norway)
    Abstract: We study the effect of salience in the social security benefit system on labor earnings by exploiting kinks and notches in budget lines introduced by earnings testing and social security accrual mechanisms for 67-69 year old workers in Norway. An earnings test had large effects on labor earnings, while an accrual system discontinuity had no discernible effects. We interpret the difference as likely to be caused by a lack of salience in the accrual incentives: agents are not able or willing to take into account the value of future benefit increases when considering the relevant rewards to working.
    Keywords: labor supply; retirement earnings test; social security wealth; difference-in-differences
    JEL: H55 J14
    Date: 2015–07–01

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