nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒04‒30
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Economics of Healthy Ageing in China By Heshmati, Almas
  2. The impact of the elderly on inflation rates in developed countries By Tim Vlandas
  3. Comparing Retirement Wealth Trajectories on Both Sides of the Pond By Blundell, Richard William; Crawford, Rowena; French, Eric Baird; Tetlow, Gemma
  4. Age, Ageing and Skills: Results from the Survey of Adult Skills By Marco Paccagnella
  5. When in life is income higher than consumption? Changes in France over 30 years By Hippolyte d’Albis; Carole Bonnet; Julien Navaux
  6. Life-Cycle Saving, Bequests, and the Role of Population in R&D-based Growth By Bharat Diwakar; Gilad Sorek
  7. Life Expectancy and its Determinants in the Czech Republic By Vojtech Korbelius; Michal Paulus; Tomas Troch

  1. By: Heshmati, Almas (Jönköping International Business School (JIBS), Centre of Excellence for Science and Innovation Studies (CESIS),& Department of Economics, Sogang University, Seoul, South Korea)
    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: 2016–04–05
  2. By: Tim Vlandas
    Abstract: What explains the cross-national variation in inflation rates in developed countries? Previous literature has emphasised the role of ideas and institutions, and to a lesser extent interest groups, while leaving the role of electoral politics comparatively unexplored. This paper seeks to redress this neglect by focusing on one case where electoral politics matters for inflation: the share of the population above 65 years old in a country. I argue that countries with a larger share of elderly have lower inflation because older people are both more inflation averse and politically powerful, forcing governments to pursue lower inflation. I test my argument in three steps. First, logistic regression analysis of survey data confirms older people are more inflation averse. Second, panel data regression analysis of party manifesto data reveals that European countries with more old people have more economically orthodox political parties. Third, time series cross-section regression analyses demonstrate that the share of the elderly is negatively correlated with inflation in both a sample of 21 advanced OECD economies and a larger sample of 175 countries. Ageing may therefore push governments to adopt a low inflation regime.
    Keywords: ageing, inflation, elderly, economic policy, electoral politics, OECD
    Date: 2016–03
  3. By: Blundell, Richard William; Crawford, Rowena; French, Eric Baird; Tetlow, Gemma
    Abstract: We use comparable data from the US and England to examine similarities and differences in the level and trajectories of assets among households aged 70 and over. We find that in the US assets on average decline gradually with age, while in England older households actually accumulate wealth. These differences appear to be driven largely, though not entirely, by housing wealth: over the period we consider house price growth drove increases in housing wealth in England that more than offset the slow draw down of non-housing wealth. This suggests the illiquid nature of housing is likely to be an important factor in explaining wealth drawdown at older ages. We also consider the potential importance of bequest motives and savings to insure against the risk of medical and long-term care expenses.
    Keywords: Savings
    Date: 2016–04
  4. By: Marco Paccagnella
    Abstract: This paper presents a comprehensive analysis of the link between age and proficiency in information-processing skills, based on information drawn from the Survey of Adult Skills (PIAAC). The data reveal significant age-related differences in proficiencies, strongly suggesting that proficiency tends to “naturally” decline with age. Age differences in proficiency are, at first sight, substantial. On average across the OECD countries participating in PIAAC, adults aged 55 to 65 score some 30 points less than adults aged 25 to 34 on the PIAAC literacy scale, which is only slightly smaller than the score point difference between tertiary educated and less-than-upper-secondary educated individuals. However, despite their lower levels of proficiency, older individuals do not seem to suffer in terms of labour market outcomes. In particular, they generally earn higher wages, and much of the available empirical evidence suggests that they are not less productive than younger workers. Older and more experienced individuals seem therefore able to compensate the decline in information processing skills with the development of other skills, generally much more difficult to measure. On the other hand, proficiency in information-processing skills remain a strong determinant of important outcomes at all ages: this makes it important to better understand which factors are the most effective in preventing such age-related decline in proficiency, which does not occur to the same extent in all countries and for all individuals. Two broad interventions seem to be particularly promising in this respect. First, it is important to ensure that there is adequate and effective investment in skills development early in the life-cycle: as skills beget skills, starting off with a higher stock of human capital seems also to ensure smaller rates of proficiency decline. Second, it is equally important that policies are in place that provide incentives to individuals (and firms) to invest in skills across the entire working life. In this respect, changes in retirement policies can not only have the short-term effect of providing some reliefs to public finance, but have the potential to radically reshape incentives to stay active, to practice their skills and to invest more in training, thus helping to maintain high levels of proficiency. Ce document présente une analyse approfondie du lien entre l’âge et les compétences en traitement de l’information, sur la base de données tirées de l’Évaluation des compétences des adultes (PIAAC). Les données mettent au jour des différences significatives de niveau de compétences en fonction de l'âge, portant fortement à croire que le niveau de compétences tend à diminuer « naturellement » avec l'âge. Les différences de niveau de compétences en fonction de l’âge sont, à première vue, substantielles. En moyenne, dans les pays de l'OCDE participant au PIAAC, les adultes âgés de 55 à 65 ans obtiennent des résultats inférieurs d’environ 30 points à ceux des adultes âgés de 25 à 34 ans sur l'échelle de compétences en littératie du PIAAC, un écart de score seulement légèrement inférieur à celui observé entre les diplômés de l’enseignement tertiaire et les individus dont le niveau de formation est inférieur au deuxième cycle du secondaire. Cependant, en dépit de leur niveau plus faible de compétences, les individus plus âgés ne semblent pas lésés en termes de résultats sur le marché du travail. En particulier, ils perçoivent en général des revenus plus élevés, et d’après la plupart des données empiriques disponibles, ne sont pas moins productifs que les travailleurs plus jeunes. Les individus plus âgés et plus expérimentés semblent donc en mesure de compenser la baisse de leurs compétences en traitement de l'information par le développement d'autres compétences, généralement beaucoup plus difficiles à mesurer. En revanche, la maîtrise des compétences en traitement de l’information reste l’un des principaux facteurs déterminants de résultats importants à tous les âges : il apparaît donc essentiel de mieux comprendre quels facteurs sont les plus à même de prévenir une telle baisse du niveau de compétences avec l'âge, l’ampleur de cette dernière n’étant pas la même dans tous les pays et pour tous les individus. Deux grandes interventions semblent particulièrement prometteuses à cet égard. Tout d'abord, il est important de veiller à l’adéquation et à l’efficacité des investissements dans le développement des compétences dès le plus jeune âge : les compétences engendrant les compétences, un stock de capital humain plus élevé au départ semble également garantir un degré moindre de déclin des compétences. Deuxièmement, il est tout aussi important de garantir la mise en oeuvre de politiques offrant aux individus (et aux entreprises) des incitations à investir dans les compétences tout au long de la vie active. À cet égard, les changements apportés aux politiques de retraite peuvent non seulement avoir un effet à court terme en allégeant quelque peu les finances publiques, mais sont également susceptibles de remodeler radicalement les incitations à rester actif, à entretenir ses compétences et à investir davantage dans la formation, contribuant ainsi à maintenir des niveaux élevés de compétences.
    Date: 2016–04–22
  5. By: Hippolyte d’Albis (PSE); Carole Bonnet (Ined); Julien Navaux (Ined)
    Abstract: The National Transfer Accounts method is used to quantify economic transfers between ages. During their working years, individuals usually produce more than they consume. The opposite occurs during their youth and retirement, when their consumption is financed by a redistribution of resources between ages. From 1979 to 2011, the period of life when income from work is higher than consumption grew shorter in France. Consumption profiles shifted to the advantage of the elderly, who now consume more in relative terms than younger cohorts.
    Date: 2016
  6. By: Bharat Diwakar; Gilad Sorek
    Abstract: This study shows how the two alternative saving motives, life-cycle consumption smoothing and parental bequests, determine the relation between population growth and R&D-based economic growth, i.e. the sign of the "weak scale-effect". We take a textbook R&D-based growth model of infinitely living agents with no weak-scale effect, and analyze it in an Overlapping Generations framework - with and without bequest saving-motive. We show how the different saving motives determine the relation between population growth and per-capita income growth, which proves to be ambiguous in general, and may also be non-monotonic. Hence, we conclude that the counterfactual weak-scale effect that is present in the second and third generations of R&D-based growth models of infinitely-living agents depends on their specific demographic structure, and thus is not inherent to R&D-based growth theory itself.
    Keywords: R&D-based Growth, Weak Scale Effect, Overlapping Generations
    JEL: O31 O40
    Date: 2016–03
  7. By: Vojtech Korbelius (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Michal Paulus (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Tomas Troch (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)
    Abstract: We model the life expectancy function for the Czech Republic using three types of explanatory variables: socio-economic, healthcare and environmental pollution factors. The paper presents the first life expectancy model of the Czech Republic and contributes to the existing literature also by the analysis of district level data and inclusion of environmental pollution variables. We found two qualitatively different life expectancy functions where one is applicable for men at the age of 45 and 65 and women at the age of 45 and the other is suitable for women at the age of 65. Key findings can be summarized as follows: only one healthcare factor was significant in all models simultaneously and environmental pollution factors were revealed as significant and should be included in other models of life expectancy function.
    Date: 2016–03

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