nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒03‒10
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The French Pension Reforms and their Impact on Unemployed Older Workers By Kadija Charni
  2. Population Aging, Fiscal Sustainability and PAYG Pension Reform By Takaaki Morimoto; Yuta Nakabo; Ken Tabata
  3. Occupations and Work Characteristics: Effects on Retirement Expectations and Timing By Brooke Helppie McFall; Amanda Sonnega; Robert J. Willis; Peter Hudomiet
  4. Health capacity to work at older ages: Evidence from Spain By Pilar García-Gómez; Sergi Jiménez-Martín; Judit Vall Castello
  5. The political choice of social long-term care transfers when family gives time and money By De Donder, P.; Leroux, M.-L.
  6. Factors associated with decreasing prevalence of dementia in the community-dwelling elderly in suburban Tokyo By Chisako Yamamoto; Tanji Hoshi
  7. The Future of Welfare Services: How Worried Should We Be about Wagner, Baumol and Ageing? By Bergh, Andreas

  1. By: Kadija Charni (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: This paper analyzes labour market position of unemployed older individuals after the implementation of two major pension reforms in France. We use the French Force Labour Survey for the period 2003-2011 to assess the effects of the 2003 and the 2010 pension reforms on the exit rate from unemployment of individuals aged over 54. Using a difference-in-differences approach, we look at the effects of these reforms on the exit from unemployment to employment, and into inactivity. We find that the 2003 pension reform reduces significantly the exit to employment, while there is no significant impact of the pension reform on the exit to inactivity. For the 2010 reform, we show that the reform leads to an increase of the probability to go back to work. At the same time, the transition out of labour force through inactivity exit also rises. Unemployment and other social schemes are used as a bridge to retire early.
    Keywords: Pension reforms, Unemployed older workers, Difference-in-differences estimation
    JEL: J3 J14 J24
    Date: 2016–01
  2. By: Takaaki Morimoto (Graduate School of Economics, Osaka University); Yuta Nakabo (Graduate School of Economics, Osaka University); Ken Tabata (School of Economics, Kwansei Gakuin University)
    Abstract: This paper examines how pay-as-you-go (PAYG) pension reform from a defined-benefit scheme to a defined-contribution scheme affects fiscal sustainability and economic growth in an overlapping generations model with endogenous growth. We show that in economies in which the old-age dependency ratio is high and the size of pension benefits under a defined-benefit scheme is large, such a pension reform mitigates the negative effect of population aging on fiscal sustainability and economic growth. However, we also show that this type of pension reform entails an intergenerational conflict of interest between current and future generations. Population aging might exacerbate the extent of this conflict.
    Keywords: Population aging, PAYG pensions, Defined-benefit schemes, Definedcontribution schemes, Fiscal sustainability
    JEL: D91 H55 O41
    Date: 2016–02
  3. By: Brooke Helppie McFall (University of Michigan); Amanda Sonnega (University of Michigan); Robert J. Willis (University of Michigan); Peter Hudomiet (RAND Corporation)
    Abstract: Population aging and attendant pressures on public budgets have spurred considerable interest in understanding factors that influence retirement timing. A range of sociodemographic and economic characteristics have been shown to predict both earlier and later retirement. Less is known about the role of occupations and their characteristics on the work choices of older workers. Knowing more about the occupations that workers seem to stay in longer or leave earlier may point the way to policy interventions that are beneficial to both individuals and system finances. This project uses detailed occupational categories and work characteristics in the Health and Retirement Study (HRS) linked to information in the Occupational Information Network (O*NET) to examine compositional changes in occupations held by older workers over time; to provide some basic and interesting information about relationships between occupations and their characteristics and retirement expectations and outcomes; and to shed some light on which occupations and associated characteristics might encourage or discourage longer working lives. There are large percentage changes (increases in decreases) in the percentage of older workers in occupations over time. Considering detailed as opposed to aggregated occupational categories yields interesting additional information. Jobs that HRS respondents say entail less physical effort, less stress, and jobs that have not increased in difficulty in recent decades, and those in which people can reduce hours if desired, are associated with longer work. While the traditional blue collar-retire earlier and white collar-work longer associations emerge, we find interesting exceptions that suggest fruitful directions for future research.
    Date: 2015–10
  4. 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
  5. By: De Donder, P. (GREMAQ); Leroux, M.-L. (Université du Québec à Montréal)
    Abstract: We develop a model where families consist of one parent and one child, with children differing in income and all agents having the same probability of becoming dependent when old. Young and old individuals vote over the size of a social long-term care transfer program, which children complement with help in time or money to their dependent parent. Dependent parents have an intrinsic preference for help in time by family members. We first show that low (resp., high) income children provide help in time (resp. in money), whose amount is decreasing (resp. increasing) with the child's income. The middle income class may give no family help at all, and its elderly members would be the main beneficiaries of the introduction of social LTC transfers. We then provide several reasons for the stylized fact that there are little social LTC transfers in most countries. First, social transfers are dominated by help in time by the family when the intrinsic preference of dependent parents for the latter is large enough. Second, when the probability of becoming dependent is lower than one third, the children of autonomous parents are numerous enough to oppose democratically the introduction of social LTC transfers. Third, even when none of the first two conditions is satisfied, the majority voting equilibrium may entail no social transfers, especially if the probability of becoming dependent when old is not far above one third. This equilibrium may be local (meaning that it would be defeated by the introduction of a sufficiently large social program). This local majority equilibrium may be empirically relevant whenever new programs have to be introduced at a low scale before being eventually ramped up.
    Keywords: Majority Voting, local Condorcet winner, crowding out, intrinsic preference for informal help, tax reform
    JEL: H55 I13 D91
    Date: 2015–05–26
  6. By: Chisako Yamamoto (Hamamatsu Gakuin University); Tanji Hoshi (Tokyo Metropolitan University)
    Abstract: Yamamoto’s previous study showed that the prevalence of dementia in the community-dwelling elderly of 65 years and older in City A of Tokyo was decreasing during a six-year follow-up 2001-2007, suggesting that there should be some factors specific to City A. The purpose of this study is to clarify City A’s specific factors in decreasing prevalence of dementia. Health status of the analysis subjects was examined in terms of ratios of approval for long-term care insurance, proportions of the elderly who had a family dentist, habits of smoking and alcohol intake, educational attainment (years of education) and interest in health issues. The analysis results were discussed reviewing official statistics and the results of previous studies. The analysis subjects showed lower ratio of approval for long-term care insurance than City A’s and National statistics. More than 70% of them had a family dentist even in 2001. Proportions of smokers in male analysis subjects were decreasing over years. As for educational attainment, 38.9% had more than 13 years of education and 24.7% had more than 16 years in the 2004 survey. The higher educational attainment, interest in health and health literacy observed in the analysis subjects seem to have been specific factors which might have promoted their health status and contributed to decreasing the prevalence of dementia. Education might be a key to decrease the prevalence of dementia.
    Keywords: prevalence of dementia; long-term care insurance; family dentist; smoking; alcohol intake; educational attainment; health literacy.
    JEL: I19
  7. By: Bergh, Andreas (Research Institute of Industrial Economics (IFN))
    Abstract: Welfare services are an important part of the Nordic welfare states both financially and for welfare state redistribution. Baumol’s cost disease, Wagner’s law, and population ageing are often said to bring challenges for the future provision of welfare services. While none of the three poses an immediate threat against the financial sustainability of the welfare state, they have important implications for distribution and for the political support for the welfare state. The combination demographic change, a higher relative price of welfare services and increasing demand for welfare services may force politicians to make a difficult choice between increasing taxes, allowing people to top up publicly financed services with additional private financing, or risk eroding support for the welfare state.
    Keywords: Welfare services; Redistribution; Baumol’s disease; Wagner’s law; Population aging
    JEL: H11 I38 J11 J18
    Date: 2016–02–12

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