nep-age New Economics Papers
on Economics of Ageing
Issue of 2017‒07‒02
fourteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Die betriebliche Altersvorsorge zur Zeit der Bonner Republik By Burhop, Carsten
  2. Population aging, labor demand, and the structure of wages By Papadopoulos, Michael; Patria, Margarita; Triest, Robert K.
  3. Does Social Security crowd out Private Savings? The Case of Bismarck’s System of Social Insurance By Lehmann-Hasemeyer, Sibylle; Streb, Jochen
  4. Does Public Health Insurance Affect How Much People Work? By Gal Wettstein
  5. Insight into the Female Longevity Puzzle: Using Register Data to Analyse Mortality and Cause of Death Behaviour Across Socio-economic Groups By Malene Kallestrup-Lamb; Carsten P.T. Rosenskjold
  6. Do State Laws Protecting Older Workers from Discrimination Reduce Age Discrimination in Hiring? Experimental (and Nonexperimental) Evidence By David Neumark; Ian Burn; Patrick Button; Nanneh Chehras
  7. Estimating life expectancy free of dependency : group characterization through the proximity to the deepest dependency path By Grane Chávez, Aurea; Alonso González, Pablo J.; Albarrán Lozano, Irene
  8. It Sucks to Be Single! Marital Status and Redistribution of Social Security By Groneck, Max; Wallenius, Johanna
  9. Interrelations and Interdependence between Demographic and Town-Planning Processes (Housing Construction, Development of Social Infrastructure) By Nazarov, Maksim; Kogan, Y.V.; Rapoport, I.K.
  10. Terminal Decline in Well-Being: The Role of Multi-Indicator Constellations of Physical Health and Psychosocial Correlates By Andreas M. Brandmaier; Nilam Ram; Gert G. Wagner; Denis Gerstorf
  11. Social Security Contributions and the Business Cycle By Almosova, Anna; Burda, Michael C; Voigts, Simon
  12. Top earners: cross-country facts By Badel, Alejandro; Daly, Moira; Huggett, Mark; Nybom, Martin
  13. Private and Public Health Investment Decisions By Atolia, Manoj; Papageorgiou, Chris; Turnovsky, Stephen
  14. Exploring Reemployment Strategies for Army Veterans: Implementation of State Pilots By Stephanie Boraas; Grace Roemer

  1. By: Burhop, Carsten
    Abstract: Corporate Retirement Plans during the Bonn Republic: Alleviating the consequences of the war were at the center of social policy during the early years of the young republic. Yet up to 1956 pensions rose only slowly and irregularly so that old-age poverty remained widespread. The transition to a dynamic pension system based on gross earnings with the 1957 Pension Reform was the major step from a social state battling need and poverty to the caregiving welfare state. The minimum pension – abolished in 1957 – was reintroduced with the 1972 Pension Reform, paving the way to the early retirement society. This paper investigates the development of corporate pension plans up to the end of 1970s. Using Volkswagen and Merck as case studies, it shows that companies reacted to changes in the economic situation earlier than did the legislature and adjusted their social benefits systems accordingly. Parallel to the transition to the dynamic pension system based on gross earnings during the late 1950s, corporate retirement plans experienced an expansion, that is to say, following the 1957 Pension Reform, private benefits were not yet replaced by public benefits. This did not change until the expansion of the social state during the 1970s. The objective of including the Works Councils in the corporate pension discussion was to curb corporate social benefits.
    JEL: G23 H55 J32 M51 N34
    Date: 2017
  2. By: Papadopoulos, Michael (New School for Social Research); Patria, Margarita (Charles River Associates); Triest, Robert K. (Federal Reserve Bank of Boston)
    Abstract: One consequence of demographic change is substantial shifts in the age distribution of the working-age population. As the baby boom generation ages, the usual historical pattern of a high ratio of younger workers relative to older workers has been replaced by a pattern of roughly equal percentages of workers of different ages. One might expect that the increasing relative supply of older workers would lower the wage premium paid for older, more experienced workers. This paper provides strong empirical support for this hypothesis. Econometric estimates imply that the size of one’s birth cohort affects wages throughout one’s working life, with members of relatively large cohorts (at all stages of their careers) earning a significantly lower wage than members of smaller cohorts. Estimated elasticities of wages with respect to the relative size of one’s own cohort are generally between -0.05 and -0.10, and are of similar magnitude for men and for women. Our results suggest that cohort size effects are quantitatively important and should be incorporated into public policy analyses.
    Keywords: labor market demographics; population aging; wage structure; social insurance
    JEL: J11 J21 J26
    Date: 2017–05–31
  3. By: Lehmann-Hasemeyer, Sibylle; Streb, Jochen
    Abstract: Imperial chancellor Bismarck’s system of social insurance (with its three pillars health, accident and pension insurance) was an important role model for social security systems across Europe and in the US. How the introduction of the German system changed economic expectations and decisions of the German workforce has not been researched, though. This article closes this gap by analyzing the development of Prussian savings banks’ deposits in the late 19th century with the help of a difference-in-difference-like approach. We show that, in the Prussian case, social security crowded out private savings considerably. As counterfactual voluntary savings would have been far from sufficient, however, Bismarck’s social insurance system was still needed to fight the misery workers and their families potentially faced in old age or times of sickness.
    JEL: D14 E21 H55 N33
    Date: 2017
  4. By: Gal Wettstein
    Abstract: Most Americans get their health insurance through their employer, so they may be reluctant to leave a job if such a change affects their coverage. This situation is known as “job lock,” which may be a particular concern for those with health problems. As a result, expansions of public health insurance, which are not tied to a job, could reduce job lock and result in some workers scaling back from full- to part-time work or leaving the labor force entirely. One way to estimate the effect of public health insurance on job lock is to look at policy changes that offer a “natural experiment." This brief, based on a recent paper, uses the introduction of Medicare Part D in 2006 to assess the extent to which the availability of drug coverage not tied to an employer induces older individuals to work less. The discussion proceeds as follows. The first section provides brief background on Medicare Part D. The second section describes the data and sets up the methodology. The third section shows trends in labor force activity among the elderly before and after 2006. The fourth section summarizes the main results. The final section concludes that, prior to the introduction of Part D, “job lock” was a significant concern for individuals who would otherwise have lost their employer drug insurance at age 65. While this group was a relatively modest portion of the total population of older Americans, this result does suggest that having the option of public health insurance can reduce a barrier to labor force transitions.
    Date: 2017–06
  5. By: Malene Kallestrup-Lamb (Aarhus University and CREATES); Carsten P.T. Rosenskjold (Aarhus University and CREATES)
    Abstract: This paper analyses the complexity of female longevity improvements. As socio-economic status influence health and mortality, we partition all individuals, at each age and year, into ten socio-economic groups based on an affluence measure. We identify the particular socio-economic groups that have been driving the standstill for Danish women and within each socio-economic group we further analyse the cause of death pattern. Further, we compare the forecast performance of the Lee-Carter model with the multi-population Li and Lee model. The decline in life expectancy for Danish women is present for all subgroups, however with particular large decreases for the low-middle and middle affluence groups. We find that causes of deaths related to smoking partly contribute to the slowdown in female longevity. However the lack of improvements in deaths relating to ischemic heart diseases is dominant in explaining the slowdown and the following catch up effect in life expectancies.
    Keywords: Mortality, Affluence Groups, Social Inequality, Cause of Death, Health, Multi-population Modelling
    JEL: J11 C53 G22
    Date: 2017–02–09
  6. By: David Neumark (University of California-Irvine); Ian Burn (University of California-Irvine); Patrick Button (Tulane University); Nanneh Chehras (University of California-Irvine)
    Abstract: We provide evidence from a field experiment — a correspondence study — on age discrimination in hiring for retail sales jobs. We collect experimental data in all 50 states and then relate measured age discrimination — the difference in callback rates between old and young applicants — to variation across states in antidiscrimination laws offering protections to older workers that are stronger than the federal age and disability discrimination laws. We do a similar analysis for nonexperimental data on differences across states in hiring rates of older versus younger workers. The experimental evidence points consistently to evidence of hiring discrimination against older men and, more so, against older women. However, the evidence on the relationship between hiring discrimination against older workers and state variation in age and disability discrimination laws is not so clear; at a minimum, there is not a compelling case that stronger state protections reduce hiring discrimination against older workers. In contrast, the non-experimental evidence suggests that stronger disability discrimination protections increase the relative hiring of older workers.
    Date: 2017–03
  7. By: Grane Chávez, Aurea; Alonso González, Pablo J.; Albarrán Lozano, Irene
    Abstract: The aging of population is perhaps the most important problem that developed countries must face in the near future. Dependency can be seen as a consequence of the process of gradual aging. In a health context, this contingency is defined as a lack of autonomy in performing basic activities of daily living that requires the care of another person or significant help. In Europe in general and in Spain in particular this phenomena represents a problem with economic, political, social and demographic implications. The prevalence of dependency in the population, as well as its intensity and its evolution over the course of a person's life are issues of greatest importance that should be addressed. The aim of this work is to estimate life expectancy free of dependency (LEFD) using categorical data and individual dependency trajectories that are obtained using the whole medical history concerning the dependency situation of each individual from birth up to 2008, contained in database EDAD 2008. In particular, we estimate LEFD in several scenarios attending to gender, proximity-group and dependency degree. Proximity-groups are established according to an L2-type distance from the dependency trajectories to a central trend within each age-gender group, using functional data techniques. The main findings are: First, the estimated LEFD curves reach higher values for women than for men; Second, their decreasing rate is higher (and more abrupt) for men than for women; Third, the more the dependency trajectories depart from the central trend, the more the gap between the LEFD for major dependency and the other dependency situations widens; Finally, we show evidence that to estimate LEFD ignoring the partition by proximity-groups may lead to nonrepresentative LEFD estimates.
    Keywords: Functional Data; Disability; Dependency; Cox Regression; ADL
    Date: 2017–06
  8. By: Groneck, Max (Dept. of Economics); Wallenius, Johanna (Dept. of Economics)
    Abstract: In this paper, we study the labor supply effects and the redistributional consequences of the U.S. social security system. We focus particularly on auxiliary benefits, where eligibility is linked to marital status. To this end, we develop a dynamic, structural life cycle model of singles and couples, featuring uncertain marital status and survival. We account for the socio-economic gradients to both marriage stability and life expectancy. We find that auxiliary benefits have a large depressing effect on married women's employment. Moreover, we show that a revenue neutral minimum benefit scheme would moderately reduce inequality relative to the current U.S. system.
    Keywords: Social Security; Spousal and Survivor Benefits; Marital Risk; Female Labor Supply; Redistribution
    JEL: D91 E62 H55 J12 J26
    Date: 2017–02–23
  9. By: Nazarov, Maksim (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Kogan, Y.V. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Rapoport, I.K. (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The volume of socially important services depends not only on the size, but also on the age and gender structure of the population. When developing strategic and territorial planning documents, it is necessary to take into account both all-Russian trends (fluctuations in the share of the child population, a steady increase in the proportion of people older than working age) and regional specifics (intensity and directions of migration flows, restructuring of the resettlement system). The analysis showed that the migration processes in Moscow entail significant changes in the volume and structure of consumption of socially important services, while also having a strong impact on the structure of their consumption in the future.
    Date: 2017–05
  10. By: Andreas M. Brandmaier; Nilam Ram; Gert G. Wagner; Denis Gerstorf
    Abstract: Well-being is often relatively stable across adulthood and old age, but typically exhibits pronounced deteriorations and vast individual differences in the terminal phase of life. However, the factors contributing to these differences are not well understood. Using up to 25-year annual longitudinal data obtained from 4,404 now-deceased participants of the nationwide German Socio-Economic Panel Study (SOEP; age at death: M = 73.2 years; SD = 14.3 years; 52% women), we explored the role of multi-indicator constellations of socio-demographic variables, physical health and burden factors, and psychosocial characteristics. Expanding earlier reports, Structural Equation Model Trees (SEM Trees) allowed us to identify profiles of variables that were associated with differences in the shape of late-life well-being trajectories. Physical health factors were found to play a major role for well-being decline, but in interaction with psychosocial characteristics such as social participation. To illustrate, for people with low social participation, disability emerged as the strongest correlate of differences in late-life well-being trajectories. However, for people with high social participation, whether or not an individual had spent considerable time in the hospital differentiated high vs. low and stable vs. declining late-life well-being. We corroborated these results with Variable Importance measures derived from a set of resampled SEM Trees (so-called SEM forests) that provide robust and comparative indicators of the total interactive effects of variables for differential late-life well-being. We discuss benefits and limitations of our approach and consider our findings in the context of other reports about protective factors against terminal decline in well-being.
    Keywords: Successful aging; life satisfaction; SEM forest; SEM tree; German Socio-Economic Panel Study
    Date: 2017
  11. By: Almosova, Anna; Burda, Michael C; Voigts, Simon
    Abstract: This paper examines magnitudes and business cycle dynamics of social security contributions (SSC). In most OECD countries studied, we document a negative covariation of payroll tax burdens with GDP and GDP growth at business cycle and lower frequencies. We assess the overall magnitude of the distortion following Barro and Redlick (2011). For most countries, average marginal SSC tax rates exceed average rates, but the latter tracks the former tightly. Changes in average payroll tax burdens are mostly accounted for by changes in tax schedules rather than shifts in the earnings distribution over time. For many countries, SSC rates behave like estimated values of the "labor wedge" (Chari et al. 2007, Brinca et al., 2016).
    Keywords: Business cycle; labor wedge; payroll tax; social security contributions
    JEL: E24 E32 H55 J32
    Date: 2017–06
  12. By: Badel, Alejandro (Georgetown University and Bureau of Labor Statistics); Daly, Moira (Copenhagen Business School); Huggett, Mark (Georgetown University); Nybom, Martin (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: We provide a common set of life-cycle earnings statistics using administrative data from the United States, Canada, Denmark and Sweden. Three qualitative patterns are common across countries: (1) the earnings distribution above the median fans out with age, (2) the extreme right tail of the earnings distribution becomes thicker with age, and (3) the growth rate of earnings over the working lifetime is larger for groups with higher lifetime earnings. Models of top earners should account for these qualitative patterns and, importantly, for how they quantitatively differ across countries.
    Keywords: earnings; inequality; top earners; top incomes
    JEL: D31 D91 H21 J31
    Date: 2017–06–01
  13. By: Atolia, Manoj; Papageorgiou, Chris; Turnovsky, Stephen
    Abstract: In recent years, there has been an explosive increase in the demand for health products and services by people all around the globe, and particularly in advanced economies. Aiming to enhance longevity but also improve quality of life, individual consumption of pharmaceutical products and services has risen exponentially since the early 1980s. This paper develops a model in which agents invest part of their resources in medical products and time in physical exercise to enhance their health status. In the first part of the paper, we study the steady state and transitional dynamics of the model with special emphasis on the effects of health decisions on aggregate outcomes. In the second part, we explore how public health policies may alter private economic decisions that promote healthier and more productive lives.
    Keywords: Private and public health investments; endogenous discounting of the rate of time preference; neoclassical growth model; health policy.
    JEL: O16 O24 O38 O43
    Date: 2017–06
  14. By: Stephanie Boraas; Grace Roemer
    Abstract: In this report, Mathematica used qualitative methods to address research questions related to implementation, identify factors that shaped states’ implementation experiences, and draw lessons that the grantee states and others can use to inform future approaches.
    Keywords: Labor, Veterans, Training and Reemployment, Unemployment Insurance
    JEL: J

This nep-age issue is ©2017 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.