nep-age New Economics Papers
on Economics of Ageing
Issue of 2017‒01‒15
twelve papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Automatic Adjustment Mechanisms in Asian Pension Systems? By Elif C Arbatli; Csaba Feher; Jack J Ree; Ikuo Saito; Mauricio Soto
  2. The Effects of Non-Contributory Pensions on Material and Subjective Well Being By Rosangela Bando; Sebastian Galiani; Paul Gertler
  3. How to Fill the Working-Age Population Gap in Asia: A Population Accounting Approach By Kang, Jong Woo; Magoncia, Grendell Vie
  4. The Impact of Demographics on Productivity and Inflation in Japan By Niklas J Westelius; Yihan Liu
  5. Analysis and Forecast of Romania’s Population Ageing by Non-Linear Methods By Mariana BĂLAN; Brînduşa-Mihaela RADU
  6. Economic Gain, Age Structure Transition, and Population Groups in the Philippines By Racelis, Rachel H.; Salas, J.M. Ian S.; Herrin, Alejandro N.; Abrigo, Michael R.M.
  7. The Impact of Workforce Aging on European Productivity By Shekhar Aiyar; Christian H Ebeke
  8. Maybe "honor thy father and thy mother": uncertain family aid and the design of social long term care insurance By Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz
  10. Who is this, who enters there? - Migration in Italy and its effect on fiscal sustainability and pensions By Bendetta Frassi; Christian Hagist; Fabio Pammolli
  11. Is faster economic growth compatible with reductions in carbon emissions? The role of diminished population growth By Casey, Gregory; Galor, Oded
  12. Forecasting labour supply and population: an integrated stochastic model By Fuchs, Johann; Söhnlein, Doris; Weber, Brigitte; Weber, Enzo

  1. By: Elif C Arbatli; Csaba Feher; Jack J Ree; Ikuo Saito; Mauricio Soto
    Abstract: Automatic adjustment mechanisms (AAMs)—rules ensuring that certain characteristics of a pension system respond to demographic, macroeconomic and financial developments, in a predetermined fashion and without the need for additional intervention—have been introduced in many OECD countries to tackle public pension schemes’ deteriorating financial sustainability. Incorporating AAMs—in particular linking retirement age to life expectancy—can be an important part of pension reforms in Asia. If implemented early, AAMs could help prevent the need for sharp adjustments in the future, increase the predictability and inter-generational equity of pension systems and enhance confidence.
    Keywords: Pensions;Japan;Korea, Republic of;China;Asia;Retirement;Pension reforms;Pension System Reform, Automatic Adjustment Mechanisms
    Date: 2016–12–13
  2. By: Rosangela Bando; Sebastian Galiani; Paul Gertler
    Abstract: Public expenditures on non-contributory pensions are equivalent to at least 1 percent of GDP in several countries in Latin America and is expected to increase. We explore the effect of non-contributory pensions on the well-being of the beneficiary population by studying the Pension 65 program in Peru, which uses a poverty eligibility threshold. We find that the program reduced the average score of beneficiaries on the Geriatric Depression Scale by nine percent and reduced the proportion of older adults doing paid work by four percentage points. Moreover, households with a beneficiary increased their level of consumption by 40 percent. All these effects are consistent with the findings of Galiani, Gertler and Bando (2016) in their study on a non-contributory pension scheme in Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in rural Mexico can be largely generalized to Peru.
    JEL: I0
    Date: 2016–12
  3. By: Kang, Jong Woo (Asian Development Bank); Magoncia, Grendell Vie (Asian Development Bank)
    Abstract: The world faces growing challenges of aging populations. Asia is no exception with rapidly increasing life expectancies and falling fertility rates. To help policy makers address these issues, this paper examines three sociopolicy options: (i) extending the retirement age, (ii) augmenting labor migration within the region, and (iii) through using population accounting methodology with the goal of increasing fertility rates. When the retirement age is extended from 65 to 70, the overall dependency ratio in 2050 would decline from 56.7% to 44.7%. If the 2010 dependency ratio were to be maintained, the region would need to import significant numbers of workers aged 15‒44 even as those aged 45‒64 would be in surplus. India, Pakistan, and the Philippines will be major sources of surplus labor. Raising fertility rates to the 2.1% replacement level will increase the dependency ratio for the time being, but will eventually reduce it over several decades depending on each country’s demographic structure.
    Keywords: demographic shift; dependency ratio; fertility rate; migration; population accounting
    JEL: J11 J13 J61
    Date: 2016–11–09
  4. By: Niklas J Westelius; Yihan Liu
    Abstract: Is Japan’s aging and, more recently, declining population hampering growth and reflation efforts? Exploiting demographic and economic variation in prefectural data between 1990 and 2007, we find that aging of the working age population has had a significant negative impact on total factor productivity. Moreover, prefectures that aged at a faster pace experienced lower overall inflation, while prefectures with higher population growth experienced higher inflation. The results give strong support to the notion that demographic headwinds can have a non-trivial impact on total factor productivity and deflationary pressures.
    Keywords: Demographic transition;Japan;Aging;Population growth;Inflation;Total factor productivity;Aging, Population Growth, Inflation, and Productivity
    Date: 2016–12–08
  5. By: Mariana BĂLAN (Institute for Economic Forecasting, Romanian Academy); Brînduşa-Mihaela RADU (Institute for Economic Forecasting, Romanian Academy)
    Abstract: Demographic ageing of population turned lately into an extremely sensible issue, even thorny at times, and with deep impact on all generations and on most fields of economic activity. Romania, like all other European countries, is faced currently with demographic decrease. Demographic changes in the next decades are susceptible of having significant impact on the development of the Romanian economy. Population ageing, as a whole, affects negatively the GDP increase, by diminishing factor entries. At the same time, this phenomenon has negative impact also on GDP per capita, in particular for the future, mainly because of the decline in the employed population segment. In this context, knowing about the future evolution of the population plays a determinant role in adopting the measures and policies of economic growth. The paper intends in this stage of research to analyse and forecast Romania’s population ageing by using non-linear models.
    Keywords: population ageing; indicators of natural population movement; non-linear models; forecasts
    JEL: C53 E20 E27 J10 J11
    Date: 2015–08
  6. By: Racelis, Rachel H.; Salas, J.M. Ian S.; Herrin, Alejandro N.; Abrigo, Michael R.M.
    Abstract: A recent Philippine study examined economic gain from age structure transition at the national level by using economic support ratios and National Transfer Accounts estimates for the years 1991, 1999, and 2011. The study showed that the Philippines has steadily been experiencing demographic change (increasing percentage of the population in the working ages) and that there was economic gain from such change, as indicated by increasing support ratios during the indicated period. But in any given year, the support ratio that is observed at the national level is actually an average across diverse groups. This paper attempts to answer the following questions: In a given year, how do support ratios vary between groups? How do the variations in support ratios between groups compare across different years? Population groups are studied to determine whether those that have higher proportions in the working ages would show higher support ratios--a pattern that was found in the study cited when the Philippines was observed at the national level over time. The population is grouped in this study on two attributes, namely, household income (terciles) and location of residence (urban or rural) for a total of six groups. These six groups are used to observe variations in population age distributions, economic lifecycle patterns, and support ratios in the years 1991, 1999, and 2011, parallel to the years covered in the national level study cited and with each year representing periods with different economic conditions.
    Keywords: Philippines, National Transfer Accounts, first demographic dividend, economic support ratio, urban economic lifecycle, rural economic lifecycle, population age structure transition
    Date: 2016
  7. By: Shekhar Aiyar; Christian H Ebeke
    Abstract: The age-distribution of Europe’s workforce has shifted towards older workers over the past few decades, a process expected to accelerate in the years ahead.. This paper studies the effect of the aging of the workforce on labor productivity, identifies the main transmission channels, and examines what policies might mitigate the effects of aging. We find that workforce aging reduces growth in labor productivity, mainly through its negative effect on TFP growth. Projected workforce aging could reduce TFP growth by an average of 0.2 percentage points every year over the next two decades. A variety of policies could ameliorate this effect.
    Keywords: Aging;Euro Area;Economic growth;Total factor productivity;Labor force participation;Demographic transition;Workforce Aging; Productivity; Policies
    Date: 2016–12–08
  8. By: Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz
    Abstract: We study the role and design of private and public insurance programs when informal care is uncertain. Children's degree of altruism is randomly distributed over some interval. Social insurance helps parents who receive a low level of care, but it comes at the cost of crowding out informal care. Crowding out occurs both at the intensive and the extensive margins. We consider three types of LTC policies: (i) a topping up (TU) scheme providing a transfer which is non exclusive and can be supplemented; (ii) an opting out (OO) scheme which is exclusive and cannot be topped up and (iii), a mixed policy combining these two schemes. TU will involve crowding out both at the intensive and the extensive margins, whereas OO will crowd out informal care solely at the extensive margin. However, OO is not necessarily the dominant policy as it may exacerbate crowding out at the extensive margin. The distortions of both policies can be mitigated by using an appropriately designed mixed policy.
    Keywords: long term care; opting out.; private insurance; public insurance; topping up; uncertain altruism
    JEL: H2 H5
    Date: 2017–01
  9. By: Shakhnoza Ganisherovna Akramova
    Abstract: This article investigates the channels through which human capital development could stimulate economic development in case of demographic transition. The ways of the efficient use of the demographic situation for the effective functioning of the human capital have been proposed. Key words: human capital; economic growth; age structure; demographic trends; fertility rate; life expectancy. Policy
    Date: 2016–09
  10. By: Bendetta Frassi; Christian Hagist; Fabio Pammolli
    Abstract: Our paper estimates the impact of immigration on the sustainability of the Italian public finances using the methodology of Generational Accounting. We take into account socio-economic differences between the main migrants’ communities resident in Italy and we present three possible scenarios to reflect the potential economic degree of integration of foreigners in the Italian territory. Moreover, for each scenario we propose several options for migrants concerning both the length of permanence in Italy and the possible collection of retirement benefits. Our results show that the burden of current fiscal policy reduces as integration of the foreign-born increases. If migrants’ children are economically perfectly integrated, the fiscal gap is reduced from 71.9 to -15.3 percent of GDP.
    Keywords: accounting, economic integration, generations, migration, public pensions, social security
    JEL: E62 H60 J10
    Date: 2017–01–02
  11. By: Casey, Gregory; Galor, Oded
    Abstract: We provide evidence that lower fertility can simultaneously increase income per capita and lower carbon emissions, eliminating a trade-off central to most policies aimed at slowing global climate change. We estimate the effect of lower fertility on carbon emissions, accounting for the fact that changes in fertility patterns affect carbon emissions through three channels: total population, the age structure of the population, and economic output. Our analysis proceeds in two steps. First, we estimate the elasticity of carbon emissions with respect to population and income per capita in an unbalanced yearly panel of cross-country data from 1950–2010. We demonstrate that the elasticity with respect to population is nearly seven times larger than the elasticity with respect to income per capita and that this difference is statistically significant. Thus, the regression results imply that 1% slower population growth could be accompanied by an increase in income per capita of nearly 7% while still lowering carbon emissions. In the second part of our analysis, we use a recently constructed economic-demographic model of Nigeria to estimate the effect of lower fertility on carbon emissions, accounting for the impacts of fertility on population growth, population age structure, and income per capita. We find that by 2100 C.E. moving from the medium to the low variant of the UN fertility projection leads to 35% lower yearly emissions and 15% higher income per capita. These results suggest that population policies could be part of the approach to combating global climate change.
    Keywords: Climate Change, Demography, Economic Growth
    JEL: J11 O40 Q50
    Date: 2017–01–05
  12. By: Fuchs, Johann (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Söhnlein, Doris (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Weber, Brigitte (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Weber, Enzo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper presents a stochastic integrated model to forecast the German population and labour supply until 2060. Within a cohort-component approach, the population forecast applies principal components to birth, mortality, emigration and immigration rates. The labour force participation rates are estimated by means of an econometric time series approach. All time series are forecast by bootstrapping. This allows fully integrated simulations and the possibility to illustrate the uncertainties in the form of confidence intervals. Our new forecast confirms the results from former studies. We conclude that even rising birth rates and high levels of immigration cannot break the basic demographic trend in the long run." (Author's abstract, IAB-Doku) ((en))
    JEL: C38 J11 J20 J21 J22
    Date: 2017–01–03

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