nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒05‒14
eighteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Older parents enjoy better filial piety and care from daughters than sons in China By Yi Zeng; Linda George; Melanie Sereny; Danan Gu; James W. Vaupel
  2. Smoking Behaviour and Early Retirement Due to Chronic Disability By Bengtsson, Tommy; Nilsson, Anton
  3. Changes in Medicare Spending per Beneficiary by Age: Working Paper 2015-08 By Xiaotong Niu; Melinda Buntin; Joyce Manchester
  4. La dynamique des fins de carrières professionnelles: Analyses sociétales et longitudinales des transitions des travailleurs âgés sur le marché de l’emploi By Wels Jacques
  5. Still Working Hard: An Update on the Share of Older Workers in Physically Demanding Jobs By Cherrie Bucknor; Dean Baker
  6. Are Counties Major Players in Public Pension Plans? By Alicia H. Munnell; Jean-Pierre Aubry
  7. Mortality Inequality: The Good News from a County-Level Approach By Currie, Janet; Schwandt, Hannes
  8. Could the Saver’s Credit Enhance State Coverage Initiatives? By Alicia H. Munnell; Anqi Chen
  9. Late Career Job Loss and the Decision to Retire By Irina Merkurieva
  10. What does age have to do with skills proficiency? By OECD
  11. Job Displacement Insurance: A Policy Typology By Parsons, Donald O.
  12. Modelling Socio-Economic Differences in the Mortality of Danish Males Using a New Affluence Index By Andrew J.G. Cairns; Malene Kallestrup-Lamb; Carsten P.T. Rosenskjold; David Blake; Kevin Dowd
  13. Renewal and stability in populations structured by remaining years of life By Timothy Riffe
  14. Housing and Tax-Deferred Retirement Accounts By Anson T. Y. Ho; Jie Zhou
  15. CBO’s 2015 Long-Term Projections for Social Security: Additional Information By Congressional Budget Office
  16. Social Security Policy Options, 2015 By Congressional Budget Office
  17. Older parents benefit more in health outcome from daughters’ than sons’ care in China By Yi Zeng; Melanie S. Brasher; Danan Gu; James W. Vaupel
  18. An Econometric Approach for Modeling Population Change in Doña Ana County, New Mexico By Fullerton, Thomas M., Jr.; Walke, Adam G.; Villavicencio, Diana

  1. By: Yi Zeng (Max Planck Institute for Demographic Research, Rostock, Germany); Linda George; Melanie Sereny; Danan Gu; James W. Vaupel (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: This study based on analyzing the unique datasets of Chinese Longitudinal Healthy Longevity Survey clearly demonstrate that, compared to having son(s), having daughter(s) is beneficial at older ages, with regards to enjoying greater filial piety from and better relationships with children and satisfaction with care provided by children. The daughter-advantages of enjoying greater filial piety from and better relationships with children are more profound among oldest-old aged 80+ compared to young-old aged 65-79, and surprisingly more profound in rural areas compared to urban areas, while son-preference is much more prevalent among rural residents. We also discuss why the rigorous fertility policy until October 2015 and less-developed pension system in rural areas substantially contribute to the sustentation of the traditional son-preference which resulted in high sex ratio at birth (SRB) when fertility is low. We recommend China to take integrative policy actions of informing the public that having daughter(s) is beneficial for old age care, developing rural pension system and implementing the most recently announced universal two-child policy as soon as possible. We believe that these policy actions would help China to change the traditional son-preference, bringing down the high SRB, and enable more future elderly parents to enjoy their life including better care provided by daughters.
    Keywords: China, daughters, parents, sons
    JEL: J1 Z0
    Date: 2015–12
  2. By: Bengtsson, Tommy (Lund University); Nilsson, Anton (Aarhus University)
    Abstract: This paper considers the long-term effects of smoking on disability retirement. Exploiting population-wide registry data from Sweden, we contribute to the literature by accounting for a much broader range of potential confounders. In particular, by the use of sibling and twin fixed effects, we account for all unobserved heterogeneity in childhood environment and family characteristics. Moreover, we are able to control for detailed information on socioeconomic status, marital status and health. We also contribute by comparing effects on different diagnoses for which disability pension was granted, thus shedding some light on the biological mechanisms linking smoking to disability retirement. We demonstrate a strong association between smoking and disability retirement. Among individuals aged 50-64, smokers have a six percentage point higher probability of receiving (full) disability pension. However, while the relationship remains significant when accounting for confounders such as family environment, the size of the effect is much attenuated. Effects are concentrated to mental and musculoskeletal conditions, but effects on neoplasms, nervous system, eye and circulatory diagnoses are also found. The results are largely driven by health problems severe enough to merit hospitalization, and there is no evidence of a role played by financial incentives.
    Keywords: smoking, disability retirement, specific conditions, siblings, twins
    JEL: I12 J26
    Date: 2016–04
  3. By: Xiaotong Niu; Melinda Buntin; Joyce Manchester
    Abstract: The aging of the population exerts upward pressure on federal spending for health care, especially Medicare, as both the number and average age of elderly beneficiaries increase. Total Medicare expenditures may also be affected by changes in relative per-beneficiary spending for beneficiaries of different ages as the population ages. In this paper, we use the Master Beneficiary Summary File to estimate spending per beneficiary for the elderly population (people between ages 65 and 105) enrolled in the traditional fee-for-service (FFS) Medicare program between 1999 and 2012. Over that period,
    JEL: I10 I13 I18 H51
    Date: 2015–11–23
  4. By: Wels Jacques
    Abstract: La réduction de l’usage des dispositifs de sortie anticipée et l’augmentation de la durée de vie à l’emploi se sont imposées comme de réels objectifs. Plusieurs réformes – implémentés, notamment, de façon non coercitive au niveau Européen – sont venues quantifier de tels objectifs. L’augmentation du taux d’emploi des travailleurs âgés de plus de 55 ans et l’augmentation de l’âge effectif moyen de la retraite sont tant d’outils quantitatifs qui servent une même finalité :l’augmentation de la participation au marché du travail des travailleurs âgés. L’une des résultantes de ces réformes est le développement, notamment en Belgique, de mécanismes de sortie partielle de l’activitié. En conséquence, les fins d’activité professionnelles prennent désormais des formes plus complexes, faites d’imbrications de différents statuts dans et en dehors du marché du travail. La thèse – qui croise une analyse des évolutions sociales de l’emploi des travailleurs âgés et une analyse longitudinale des parcours professionnels – est divisée en trois chapitres qui ont trait successivement aux indicateurs utilisés pour quantifier la sortie anticipée de l’emploi, au développement des instruments de réduction du temps de travail en fin de carrière et à l’impact des réductions du temps de travail en fin de carrière sur l’emploi des jeunes. Le premier chapitre prend appui sur une analyse macrosociologique des dynamiques du marché du travail. En mettant l’accent sur la sortie anticipée de l’activité professionnelle en tant que problème social, nous interrogeons, d’une part, l’écart temporel qui existe entre l’âge de la sortie de l’activité professionnelle et l’âge de la retraite et, d’autre part, les différents mécanismes qui sont utilisés en Europe pour sortir prématurément du marché du travail. La première partie repose principalement sur une analyse détaillée de l’indicateur « âge effectif moyen de la retraite » fourni par l’OCDE. Une analyse longitudinale (report de statut d’une année à l’autre) est également réalisée. La seconde partie, quant à elle, utilise une classification hiérarchique et évalue l’évolution des résultats des politiques publiques en matière d’usage de statuts entre 2000 et 2010. Le second chapitre analyse les politiques de réduction du temps de travail destinées aux travailleurs âgés. Plusieurs aspects sont étudiés. La première partie prolonge l’analyse comparative qui a été développée dans le premier chapitre en comparant l’évolution des politiques publiques en matière de transitions des individus d’un statut vers un autre (emploi, chômage et inactivité). La seconde partie met l’accent sur le développement récent de « statuts composites » – terme que nous utilisons ici pour décrire la combinaison d’une position sur le marché de l’emploi et de prestations sociales. Enfin, les troisième et quatrième parties s’intéressent à l’évolution législative et empirique de deux dispositifs :le crédit-temps (en Belgique) et le cumul emploi-retraite (en France et en Belgique). Enfin, le troisième chapitre propose une analyse de la notion de partage d’emploi entre générations. Une première partie étudie l’impact des variations économiques sur l’emploi des jeunes générations et des travailleurs âgés dans les pays européens. L’analyse, descriptive, prend appui sur trois notions (synchronie, hystérèse et dyschronie) qui décrivent les impacts différenciés des variations économiques sur les transitions professionnelles. La seconde partie analyse, pour le cas de la Belgique, le phénomène de partage d’emploi entre générations et la notion de « lump of labour fallacy ». Sur base des données issues du Datawarehouse Marché du Travail et Protection Sociale, deux régressions logistiques sont réalisées afin d’évaluer l’impact de l’usage des différents statuts composites utilisés par les travailleurs âgés sur l’emploi des jeunes.
    Abstract: The reduction in the use of early retirement schemes, and, consequently, the increase in the duration of the working life have emerged as real targets. Several non-coercive measuring instruments have been implemented by European public policy for quantifying these targets. For instance, the increase in the employment rate of workers aged over 55 years old and the increase of the average effective age of retirement are quantitative tools used of achieving the same purpose: increasing the participation in the labour market of the older workers. One of the effects of these reforms has been the development of part-time early retirement arrangements, particularly in Belgium. Consequently, ends of professional careers take more complex forms characterized by interconnections of different statuses within and outside the labour market. The thesis – crossing an analysis of the evolution of the employment participation of older workers and a longitudinal analysis of professional careers – is divided into three chapters relating successively to indicators used for quantifying early withdrawals, the development of instruments aiming at reducing working time at the end of the career and the impact of working time arrangements at the end of the career on youth employment. The first chapter is based on a macro-sociological analysis of the dynamics of the labour market. First, by focusing on the early withdrawal of the older workers as a social problem, the thesis analyses the time gap between the withdrawal age and the compulsory retirement age. Second, the large set of arrangement used in Europe for leaving prematurely the labour market is examined. The first part is mainly based on a detailed analysis of the "average effective retirement age" indicator provided by the OECD. A longitudinal analysis (report of statuses from one year to the next) is also performed. The second part uses a hierarchical classification (clustering) and evaluates the evolution of the public policies effects between 2000 and 2010.The second chapter focuses on the working time reduction policies dedicated to older workers. Several aspects are reviewed. The first part extends the analysis developed in the first chapter by comparing the evolution of public policies on individual’s transitions from one status to another. The second part focuses on the recent development of "composite statutes" – a notion used to describe the combination of a position on the labour market and social benefits. Finally, the third and fourth parts focus on the legislative and the empirical evolution of two specific arrangements: the time credit (Belgium) and the combination of work and employment (France and Belgium).The third chapter provides an analysis of social rapports between generations on the labour market. The first part examines the impact of economic changes on the employment of younger generations and older workers in European countries. The analysis is based on three economic concepts – synchrony, hysteresis and dyschrony – describing the differentiated impact of economic changes on employment transitions. The second part, focusing on Belgium, examines the phenomenon of job sharing between generations and the concept of "lump of labour fallacy". Based on data derived from the Datawarehouse Labour Market and Social Protection, two logistic regressions are performed in order to evaluate the impact of the different composite statutes dedicated to older workers on the youth employment rate.
    Keywords: Travailleurs âgés; Marché de l'emploi; Partage de l'emploi; Retraites; Temps de travail; Vieillissement; Statuts composites; Lump of labour fallacy
    Date: 2016–04–27
  5. By: Cherrie Bucknor; Dean Baker
    Abstract: A recurring theme in debates over Social Security policy is that workers should be encouraged to work later into their lives by raising the age at which they can get full benefits. Implicit in this argument is that most workers are in a situation where they would be able to work to an older age; however, many older workers stop working because they can no longer meet the physical demands of their job. In 2010, CEPR did an analysis that examined the percentage of older workers (ages 58 and over) who either worked in physically demanding jobs or in difficult work conditions. This paper is an update of that earlier study and is based on data from 2014. Using data from the Current Population Survey (CPS) and Occupational Information Network (O*NET) it finds that in 2014, 8.0 million workers ages 58 and older (34.5 percent) had physically demanding jobs, while 5.1 million workers ages 58 and older (22.1 percent) had jobs with difficult working conditions. About 10.2 million workers ages 58 and older (43.8 percent) were employed either in physically demanding jobs or jobs with difficult working conditions. The workers who were most likely to be in these jobs were Latinos, the least educated (less than a high school diploma), immigrants, and the lowest wage earners. Physically demanding jobs include general physical activities, handling and moving objects, spending significant time standing, walking or running, making repetitive motions, or having any highly physically demanding work. Highly physically demanding jobs require dynamic, explosive, static, or trunk strength, bending or twisting of the body, stamina, maintaining balance, or kneeling or crouching. Difficult working conditions include working in a cramped workspace, labor outdoors, or exposure to abnormal temperatures, contaminants, hazardous equipment, whole body vibration, or distracting or uncomfortable noise.
    JEL: H H6 H62 H63 H68 J J1 J14 J18 J3 J32 J38
    Date: 2016–03
  6. By: Alicia H. Munnell; Jean-Pierre Aubry
    Abstract: Most analyses of public pensions focus on states and cities. Less has been written about the role of counties, which are significant public service providers in some states. This brief sheds light on pension activity at the county level by documenting the costs, funded status, and unfunded liabilities to determine whether counties should regularly be included in analyses of state and local pensions. The discussion proceeds as follows. The first section describes the nature and role of counties in the state government structure. The second section takes a closer look at states where counties administer their own pension plans as opposed to participating in state-administered plans, with a special emphasis on Maryland, Virginia, and California. The third section focuses on pension expense as a percentage of revenues for counties and compares this ratio to that of states and cities. The fourth section reports the funded status of pension plans administered by counties and reports counties’ total unfunded liabilities stemming from both their own plans and the state plans in which they participate. The final section concludes that the importance of counties varies significantly across states but, in the aggregate, counties account for only 12 percent of total unfunded pension liabilities. That said, in states such as Maryland, Virginia, and California, discussing the pension landscape without considering counties would provide a very misleading picture.
    Date: 2016–05
  7. By: Currie, Janet (Princeton University); Schwandt, Hannes (University of Zurich)
    Abstract: Analysts who have concluded that inequality in life expectancy is increasing have generally focused on life expectancy at age 40 to 50. However, we show that among infants, children, and young adults, mortality has been falling more quickly in poorer areas with the result that inequality in mortality has fallen substantially over time. This is an important result given the growing literature showing that good health in childhood predicts better health in adulthood and suggests that today's children are likely to face considerably less inequality in mortality as they age than current adults. We also show that there have been stunning declines in mortality rates for African-Americans between 1990 and 2010, especially for black men. The fact that inequality in mortality has been moving in opposite directions for the young and the old, as well as for some segments of the African-American and non-African-American populations argues against a single driver of trends in mortality inequality, such as rising income inequality. Rather, there are likely to be multiple specific causes affecting different segments of the population. We show that the differential timing of smoking reductions among the rich and the poor can explain a significant fraction of the current increase in mortality inequality in older cohorts.
    Keywords: mortality, inequality, racial differences, smoking
    JEL: I14 I32 J11 J13
    Date: 2016–04
  8. By: Alicia H. Munnell; Anqi Chen
    Abstract: At any given moment, about half of private sector workers are not covered by any sort of employer-sponsored retirement plan. This coverage gap means that many households must rely exclusively on Social Security in retirement. Since most of those without coverage work for small employers, policymakers for decades have tried to solve the problem by introduc­ing simplified retirement plans. But these initiatives have not worked. Recognizing the difficulty in getting small busi­nesses to adopt plans, the Obama Administration proposed “Automatic IRAs” in 2009 to cover the uncovered. But no progress has been made at pass­ing federal legislation. So several states have stepped into the breach and are setting up their own plans for uncovered workers. These state initiatives could potentially be enhanced by the federal Saver’s Credit, an existing tax incentive that could, in essence, provide a match on contributions to a state plan. But the current credit is limited and not refundable; proposed legislation would extend the credit and make it refundable. This brief, using Connecticut as an example, examines the effectiveness of the current Saver’s Credit and the proposed changes. The discussion proceeds as follows. The first section describes the coverage problem, the state initiatives in general, and Connecticut’s tentative plan in particular. The second section presents the current version of the Saver’s Credit and how it works in theory and practice. The third section describes the impact of a typical legislative proposal to expand the Saver’s Credit and make it refundable. The final section concludes that, in its current form, the Saver’s Credit is limited in its effectiveness as a government match mechanism. However, changing the phase-out structure and making the credit refundable could considerably enhance state retirement initiatives by encouraging participation and increasing the amount of money going into the plans.
    Date: 2016–04
  9. By: Irina Merkurieva (University of St Andrews)
    Abstract: This paper provides an empirical analysis of the effect of involuntary job loss on the lifetime income and labor supply of older workers. I develop and estimate a dynamic programming model of retirement and savings with costly job search and exogenous layoffs. The structural estimates from the Health and Retirement Study data show that older displaced workers lose up to one and a half years of pre-displacement earnings over the remaining lifetime. Most of this loss (80%) is due to the permanent wage penalty following displacement, while the rest is explained by search frictions. Involuntary job loss makes an average worker retire fifteen months earlier. However, workers who were approaching retirement at the onset of the Great Recession will increase their labor supply by approximately five months in response to the joint impact of changes in the value of household assets and the probabilities of losing and finding a job.
    Keywords: retirement, life-cycle labor supply, layoff cost, saving, cyclical unemployment
    JEL: J14 J26 J64
    Date: 2016–04–12
  10. By: OECD
    Abstract: The Survey of Adult Skills finds that adults aged 55 to 65 are less proficient in literacy and numeracy than adults aged 25 to 34. But differences in skills proficiency that are related to age vary widely across countries, implying that skills policies can affect the evolution of proficiency over a lifetime. And while older adults are generally less proficient than younger adults, they do no worse – and often better – than younger adults in terms of labour market outcomes.
    Date: 2016–04–26
  11. By: Parsons, Donald O. (George Washington University)
    Abstract: Efforts to insure long-tenured displacement workers against earnings losses from unemployment spells and lower wages on subsequent jobs have led to an array of government and employer programs. A policy typology is proposed to impose order on these programmatic efforts. The basic typology involves the familiar distinction between (i) separation benefit type – fixed sum severance or unemployment-linked – and (ii) financing type – insurance or savings. In this four-way categorization, severance savings accounts are the least familiar, perhaps because they are often mislabeled as unemployment insurance savings accounts (UISA). A third policy dimension – the job separation events that trigger plan payouts – is also fundamental to understanding program performance and consequences. Indeed insurance plan performance converges on that of savings plans as the range of insured events and their likelihoods expand. Severance "savings" plans require payouts other than for involuntary separation, most commonly for retirement, which highlights the link with pensions. Conversely the severance properties of pension plans vary with ownership rights (vesting) and "rollover" rules. Forced savings plans that also permit fund access for house purchases and/or human capital investments (provident funds) are an obvious extension of strict severance savings plans.
    Keywords: job displacement, unemployment insurance, severance pay, moral hazard, job turnover, pensions, provident funds
    JEL: J65 J41 J33
    Date: 2016–04
  12. By: Andrew J.G. Cairns (Maxwell Institute for Mathematical Sciences and Heriot-Watt University 4AS, United Kingdom. E-mail:; Malene Kallestrup-Lamb (Aarhus University and CREATES); Carsten P.T. Rosenskjold (Aarhus University and CREATES); David Blake (Pensions Institute, Cass Business School, City University of London); Kevin Dowd (Durham University Business School)
    Abstract: We investigate and model how the mortality of Danish males aged 55-94 has changed over the period 1985-2012. We divide the population into ten socio-economic subgroups using a new measure of affluence that combines wealth and income reported on the Statistics Denmark national register database. The affluence index, in combination with sub-group lockdown at age 67, is shown to provide consistent sub-group rankings based on crude death rates across all ages and over all years in a way that improves significantly on previous studies that have focused on life expectancy. The gap between the most and least affluent is confirmed to be widest at younger ages and has widened over time. We introduce a new multi-population mortality model that fits the historical mortality data very well and generates smoothed death rates that can be used to model a larger number of smaller sub-groups than has been previously possible without losing the essential character of the raw data. The model produces bio-demographically reasonable forecasts of mortality rates that preserve the sub-group rankings at all ages. It also satisfies reasonableness criteria related to the term structure of correlations across ages and over time through consideration of future death and survival rates.
    Keywords: Danish mortality data; affluence; CBD-X model; gravity model; multipopulation mortality modelling
    JEL: J11 C53 G22
    Date: 2016–05–03
  13. By: Timothy Riffe (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The Lotka-Leslie renewal model is the core of formal demography. This model is structured by chronological age, and it does not account for thanatological age. I derive a speci?cation of the classic renewal equation that is structured by thanatological age rather than by chronological age. I give both continuous and discrete variants of the derived model, and relate these to the Lotka-Leslie renewal model. In stability, the thanatological and chronological renewal models are commensurable, implying identical intrinsic growth rates. I demonstrate approximate symmetry be- tween chronological and thanatological age structure in stability when subject to intrinsic growth rates equal magnitude and opposite sign. Birth-death renewal processes can be expressed as death-birth processes, and vice versa. The thanatological renewal model o?ers a new perspective on population renewal, and it is valid more generally as an aspect of birth-death processes.
    Keywords: stable population
    JEL: J1 Z0
    Date: 2015–11
  14. By: Anson T. Y. Ho; Jie Zhou
    Abstract: Assets in tax-deferred retirement accounts (TDA) and housing are two major components of household portfolios. In this paper, we develop a life-cycle model to examine the interaction between households’ use of TDA and their housing decisions. The model generates life-cycle patterns of home ownership and the composition of net worth that are broadly consistent with the data from the Survey of Consumer Finances. We find that TDA promotes home ownership, as households take advantage of the preferential tax treatments for both TDA and home ownership. They substitute TDA assets for home equity by accumulating wealth in TDA and making smaller down payments (taking out bigger mortgages); consequently, they become homeowners earlier in their lives. On the other hand, housing-related policies, such as a minimum down payment requirement and mortgage interest deductibility, affect households’ housing decisions more than their use of TDA.
    Keywords: Economic models, Housing
    JEL: C61 D14 D91 E21 H24 R21
    Date: 2016
  15. By: Congressional Budget Office
    Abstract: Under current law, CBO projects, Social Security’s trust funds, considered together, will be exhausted in 2029. In that case, benefits in 2030 would need to be reduced by 29 percent from the scheduled amounts.
    JEL: H55 H60 H68 J26
    Date: 2015–12–16
  16. By: Congressional Budget Office
    Abstract: CBO analyzes 36 policy options commonly proposed by policymakers and analysts. Most of them would improve Social Security’s long-term finances, but only a few would significantly postpone the combined trust funds’ exhaustion date.
    JEL: H55 H60 H68 J26
    Date: 2015–12–15
  17. By: Yi Zeng (Max Planck Institute for Demographic Research, Rostock, Germany); Melanie S. Brasher; Danan Gu; James W. Vaupel (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: -
    Keywords: China
    JEL: J1 Z0
    Date: 2015–09
  18. By: Fullerton, Thomas M., Jr.; Walke, Adam G.; Villavicencio, Diana
    Abstract: An econometric model using time series analysis techniques is employed to model and forecast population changes in Doña Ana County, New Mexico. The model focuses on the interplay between economic and demographic variables. Individual, cointegrated equations are generated to account for the components of population change - births, deaths, net domestic and net international migration. Birth and death equations prove easier to model because of stable changes from period to period in relation to income levels and national demographic trends. Net migration equations were more difficult to model as economic conditions, specifically labor market conditions, influence changes over time. Predefined exogenous variables are used to generate out-of-sample simulations for the individual components of population change. Using those results, total population projections are estimated until the year 2018. Doña Ana County is projected to witness a slowdown in population growth, primarily as a consequence of increased domestic out-migration.
    Keywords: Population Economics, Regional Economics, Applied Econometrics, Migration, Forecasting
    JEL: J11 R15
    Date: 2015–01–15

This nep-age issue is ©2016 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.