nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒06‒09
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Access to Health Care and the Out-of-Pocket Burden of the European Elderly By Veronika Krutilova
  2. Fiscal sustainability and demographic change: a micro approach for 27 EU countries By Dolls, Mathias; Doorley, Karina; Paulus, Alari; Schneider, Hilmar; Siegloch, Sebastian; Sommer, Eric
  3. Demographic Change and Fiscal Sustainability in Asia By Sang-Hyop Lee; Jungsuk Kim; Donghyun Park
  4. Measuring Dependency Ratios using National Transfer Accounts By Barslund, Mikkel; von Werder, Marten
  5. Poverty Risk among Older Immigrants in a Scandinavian Welfare State By Jakobsen, Vibeke; Pedersen, Peder J.
  6. Age or time-to-death – what drives health care expenditures? Panel data evidence from the OECD countries By Maciej Lis
  7. Mortality inequality: the good news from a county-level approach By Janet Currie; Hannes Schwandt
  8. Do Households Save More When the Kids Leave Home? By Irena Dushi; Alicia H. Munnell; Geoffrey T. Sanzenbacher; Anthony Webb; Anqi Chen
  9. Social Security Policy Options, 2015 By Congressional Budget Office
  10. A unified framework of demographic time By Timothy Riffe; Jonas Schöley; Francisco Villavicencio Goula

  1. By: Veronika Krutilova (Research Centre, Faculty of Business and Economics, Mendel University in Brno, Zemedelska 1, 61300 Brno)
    Abstract: Provision of access to health care is a desirable feature of health care systems. Access to health care is caused to be restricted whether out-of-pocket burden is too high. The paper focuses on the European elderly with restricted access to health care and evaluates their health care burden and determines factors affecting the burden. The data from the Survey of Health, Ageing and Retirement in Europe from the fifth wave is used. The methods of descriptive and multivariate analysis are applied. A linear regression model with a bootstrapped method is used. The results showed that inequalities in access to health care exist. Unmet need is a critical issue in Estonia and Italy. The highest burden is found in Estonia, Italy and Belgium. Chronic diseases and limitation in activities significantly contributes to health care burden. Expenditure on drugs, outpatient and nursing care have a significant effect on the burden. The effect is found to be insignificant for inpatient care. Income and the employment status is a preventing factor.
    Keywords: elderly, unmet need, health care, out-of-pocket payments, access to health care, health care burden, SHARE.
    JEL: I14 I18 J14
    Date: 2016–05
  2. By: Dolls, Mathias; Doorley, Karina; Paulus, Alari; Schneider, Hilmar; Siegloch, Sebastian; Sommer, Eric
    Abstract: The effect of demographic change on the labor force and on fiscal revenues is topical in light of potential pension shortfalls. This paper evaluates the effect of demographic changes between 2010 and 2030 on labor force participation and government budgets in the EU-27. Our analysis involves the incorporation of population projections, and an explicit modeling of the supply and demand side of the labor market. Our approach overcomes a key shortcoming of most existing studies that focus only on labor supply when assessing the effects of policy reforms. Ignoring wage reactions greatly understates the increase in fiscal revenues, suggesting that fiscal strain from demographic change might be less severe than currently perceived. Finally, as a policy response to demographic change and worsening fiscal budgets, we simulate the increase in the statutory retirement age. Our policy simulations confirm that raising the statutory retirement age can balance fiscal budgets in the long run.
    Date: 2016–01–06
  3. By: Sang-Hyop Lee (East-West Center and University of Hawaii at Manoa, Honolulu, USA); Jungsuk Kim (Institute of International and Area Studies, Sogang University, Korea); Donghyun Park (Asian Development Bank, Manila, Philippines)
    Abstract: Changes in the population age structure can have a significant effect on fiscal sustainability since they can affect both government revenues and expenditures. For example, population aging will increase expenditures on the elderly while reducing potential growth and hence revenues. In this paper, we project government revenue, expenditure, and fiscal balance in developing Asia up to 2050. Using a simple stylized model and the National Transfer Accounts (NTA) data set, we simulate the effect of both demographic changes and economic growth. Rapidly aging countries like Korea, Japan, and Taipei, China, are likely to suffer a tangible deterioration of fiscal sustainability under their current tax and expenditure system. On the other hand, rapid economic growth can improve fiscal health in poorer countries with relatively young populations and still-growing working-age populations. Overall, our simulation results indicate that Asia’s population aging will adversely affect its fiscal sustainability, pointing to a need for Asian countries to further examine the impact of demographic shifts on their fiscal health.
    Keywords: Fiscal projection, tax, public spending, fiscal balance, population aging, Asia
    JEL: J11 J14 H20 H50 H62
    Date: 2016–01
  4. By: Barslund, Mikkel; von Werder, Marten
    Abstract: Future older generations will have increasingly better health and are likely to work longer. It is now widely recognised that the socio-economic changes that ageing societies will bring about are poorly captured by the traditional demographic dependency ratios (DDRs), such as the old-age dependency ratio that relates the number of people aged 65+ to the working-age population. In this paper the authors combine population projections and National Transfer Accounts (NTA) data for seven European countries, project the quantitative impact of ageing on public finances until 2040 and compare it to projected DDRs. They then simulate the public finance impact of changes in three key indicators related to the policy responses to population ageing: net immigration, healthy ageing and longer working lives, by linking age-specific public health transfers and labour market participation rates to changes in mortality. Four main findings emerge: first, the simple old-age dependency ratio overestimates the future public finance challenges faced by the countries studied – significantly so for some countries, namely Austria, Finland and Hungary. Second, healthy ageing has a modest effect (on public finances) except in the case of Sweden, where it is substantial. Third, the long-run effect of immigration is well captured by the simple DDR measure if immigrants are similar to the native population. Finally, the authors find that increasing the length of working lives is key to addressing the public finance challenge of ageing; extending working lives by three to four years over the next 25 years – equivalent to the increase in life expectancy – severely limits the impact of ageing on public transfers.
    Date: 2016–04
  5. By: Jakobsen, Vibeke (Danish National Centre for Social Research (SFI)); Pedersen, Peder J. (Aarhus University)
    Abstract: Focus in the paper is on poverty among immigrants and refugees 50 years and older coming to Denmark from countries outside the OECD, with main emphasis on immigrants coming as guest workers before 1974, as refugees and as family members and marriage partners – tied movers – relative to individuals coming as guest workers and as refugees. A major share of people in this group were fairly young at arrival to Denmark. Those arriving back in the 1970s and 1980s are now either close to or above the age of 60, with conditional eligibility to a labor market related early retirement program or the age 65 where you become eligible for State pension. Poverty rates by national background are described using alternative household concepts. Next, a number of background factors of relevance for poverty are summarized. We focus on age, gender, marital status, occupational status at age 55 and duration of residence. We find major differences between migrant groups and between migrants and natives regarding how income is composed at different ages on market income, pensions and benefits. Next, we present a number of regressions aiming at explaining differences in the poverty risk with differences in a number of background factors.
    Keywords: immigrants, old age poverty, family structure
    JEL: F22 H55 I32 J14
    Date: 2016–05
  6. By: Maciej Lis
    Abstract: The most important engines for the growth of aggregate health care expenditures (HCE) in last 50 years in OECD have been growth of income, technological progress in medicine and their interaction with institutional setting. The accelerating ageing is expected to additionally fuel the growth of HCE. The interaction between the growth factors with age is crucial for understanding the impact of ageing on health care expenditures. We propose a non-linear framework for testing the dynamics of the interaction of the growth of HCE with age structure. This framework utilizes the micro and cohort evidence from other studies on the shape of HCE and time-to-death. We have found that the growth of health care expenditure in recent decades in 26 OECD was concentrated on the close-to-death expenditures. Close-to-death HCE demonstrated twice higher growth rates than expenditures more distant from death. No clear dynamics of age pattern has been however identified.
    Keywords: health, modelling
    JEL: H51 I12 I18 J14
    Date: 2016–04
  7. By: Janet Currie; Hannes Schwandt
    Abstract: In this essay, we ask whether the distributions of life expectancy and mortality have become generally more unequal, as many seem to believe, and we report some good news. Focusing on groups of counties ranked by their poverty rates, we show that gains in life expectancy at birth have actually been relatively equally distributed between rich and poor areas. Analysts who have concluded that inequality in life expectancy is increasing have generally focused on life expectancy at age 40 to 50. This observation suggests that it is important to examine trends in mortality for younger and older ages separately. Turning to an analysis of age-specific mortality rates, we show that among adults age 50 and over, mortality has declined more quickly in richer areas than in poorer ones, resulting in increased inequality in mortality. This finding is consistent with previous research on the subject. However, among children, mortality has been falling more quickly in poorer areas with the result that inequality in mortality has fallen substantially over time. We also show that there have been stunning declines in mortality rates for African Americans between 1990 and 2010, especially for black men. Finally we offer some hypotheses about causes for the results we see, including a discussion of differential smoking patterns by age and socioeconomic status.
    JEL: N0
    Date: 2016
  8. By: Irena Dushi; Alicia H. Munnell; Geoffrey T. Sanzenbacher; Anthony Webb; Anqi Chen
    Abstract: Kids are expensive. As a result, when children become financially independent, parents often have a substantial amount of extra money on hand. In this case, they have two basic choices: spend more on themselves or increase their saving for retirement. What they actually do is an open question. Answering this question is important – much of the debate on whether or not we face a retirement sav­ings crisis comes down to what parents do when the kids leave. If they spend the extra money, they will arrive at retirement with fewer resources and a higher standard of living to maintain. In contrast, if they save the money, they will have more resources for retirement and a lower standard of living to maintain. This brief, based on a recent paper, uses tax data to analyze how saving behavior in 401(k) plans changes for married couples when their children leave. The discussion is organized as follows. The first section provides more detail on why households’ response to the kids leaving is important. The second section describes the data and methodology. The third section summarizes the results. The final section concludes that households do increase their savings when the kids leave, but the increases are extremely small, suggesting that we do indeed face a retirement savings crisis.
    Date: 2016–05
  9. 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
  10. By: Timothy Riffe (Max Planck Institute for Demographic Research, Rostock, Germany); Jonas Schöley (Max Planck Institute for Demographic Research, Rostock, Germany); Francisco Villavicencio Goula (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Demographic thought and practice is largely conditioned by the Lexis diagram, a two-dimensional graphical representation of the identity between age, period, and birth cohort. This relationship does not account for remaining years of life or other related time measures, whose use in demographic research is both underrepresented and incompletely situated. We describe a three-dimensional relationship between six di?erent measures of demographic time: chronological age, time to death, lifespan, time of birth, time of death, and period. We describe four identities among subsets of these six measures, and a full identity that relates the six of them. One of these identities is the age-period-cohort identity, while the other three are relatively novel. We provide a topological overview of the diagrams that pertain to these identities. The 3-d geometric representation of the full six-way identity is proposed as a coordinate system that fully describes temporal variation in demographic data. We o?er this framework as an instrument to enable the discovery of yet-undescribed relationships and patterns in formal and empirical demography.
    Keywords: demography
    JEL: J1 Z0
    Date: 2015–11

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.