nep-age New Economics Papers
on Economics of Ageing
Issue of 2017‒09‒17
fifteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Are Many Retirees with Dementia Lacking Help? By Anek Belbase; Geoffrey T. Sanzenbacher; Sara Ellen King
  2. Does the negative effect of caregiving on work persist over time? By Heger, Dörte; Korfhage, Thorben
  3. Pension and income transfers for old age: Inter- and intra-generational distribution in comparative perspective By Filgueira, Fernando; Manzi, Pilar
  4. The dynamics of the Italian labour force participation rate: determinants and implications for the employment and unemployment rate By Marta De Philippis
  5. Long-Term Care in Latin America and the Caribbean? Theory and Policy Considerations By Martín Caruso; Sebastian Galiani; Pablo Ibarrarán
  6. The affluency to quit: How inheritances affect retirement plannings By Crusius, Tobias L.; von Werder, Marten
  7. Economic Inequality and Happiness: A quantitative study among the elderly in Rural Vietnam By Quang Tran, Tuyen; Viet Nguyen, Cuong; Van Vu, Huong
  8. Grandparental availability for child care and maternal labor force participation: Pension reform evidence from Italy By Massimiliano, Bratti; Tommaso, Frattini; Francesco, Scervini
  9. Guardianship and the Representative Payee Program By Anek Belbase; Geoffrey T. Sanzenbacher
  10. Reforms to New Zealand Superannuation Eligibility: Are They a Good Idea? By Gemmell, Norman
  11. Alternativas para extender la cobertura del sistema de protección económica a la vejez en Colombia By Leonardo Villar; Alejandro Becerra; David Forero
  12. Closing the Divide: Progress and Challenges in Adult Skills Development among Indigenous Peoples By Parisa Mahboubi; Colin Busby
  13. Family Transfers With Retirement-Aged Adults in the United States: Kin Availability, Wealth Differentials, Geographic Proximity, Gender, and Racial Disparities By Ashton M. Verdery; Jonathan Daw; Colin Campbell; Rachel Margolis
  14. Multivariate Density Modeling for Retirement Finance By Christopher J. Rook
  15. Andamento demografico, immigrazione e sviluppo economico del territorio By Aurelio Bruzzo

  1. By: Anek Belbase; Geoffrey T. Sanzenbacher; Sara Ellen King
    Abstract: Many older individuals with cognitive impairment, including the vast majority of people with dementia, need help managing their finances. For retirees receiving Social Security benefits, the Representative Payee Program can serve as one source of this help. In the Representative Payee Program, a retiree’s benefit is sent to another person (often a relative) who spends it on the retiree’s behalf and submits records to Social Security documenting that the expenditures were in the beneficiary’s best interest. But the program seems to be seldom used by those with dementia: of those 65 and older, over 10 percent have dementia, but just 1.5 percent have a payee. This lack of participation may not be a problem as long as the retiree has some other source of help. This brief – based on a recent paper – uses data from the Health and Retirement Study (HRS) linked to administrative Social Security records to first document what share of retirees with mild cognitive impairment or dementia use the Representative Payee Program. Given that few use the program, the brief then turns to the question of what they do instead. The options considered include help from an informal caregiver (e.g., a non-impaired spouse or child), from the staff of a nursing home, or from a Power of Attorney they may have assigned. Once these sources of help are identified, the brief then focuses on the types of people who seem to lack any observed form of aid in order to help policymakers and community-based organizations better identify the most vulnerable individuals. The discussion proceeds as follows. The first section estimates the share of retirees with mild cognitive impairment and dementia. The second section documents what sources of help people have and what share of retirees with impairment are lacking it. The third section identifies groups who are especially likely to have no observed source of help available. The final section concludes that while few retirees with dementia use the Representative Payee Program, the vast majority have some potential source of assistance. Groups vulnerable to having no help available include those with less education, minorities, and individuals living in densely populated areas.
    Date: 2017–08
  2. By: Heger, Dörte; Korfhage, Thorben
    Abstract: Informal caregivers provide valuable services to elderly persons with long-term care needs. However, the time commitment of caregiving often competes against time spent in the labour force. In addition to the momentary trade-off, long-term consequences are possible since especially older workers might find it difficult to re-enter the labour market after a caregiving spell. While several studies document a negative relationship between caregiving and work, little is known about whether this effect is persistent over time. Analysing a large panel data set of 15 European countries and Israel, we show that care provision to an elderly parent has lasting negative effects on employment for both men and women but only women reduce their working hours.
    Keywords: informal care,labour market outcomes,short and medium term effects
    JEL: J14 J22
    Date: 2017
  3. By: Filgueira, Fernando; Manzi, Pilar
    Abstract: This document provides a world comparative analysis regarding the design and reform of pension systems in order to improve coverage, equality and sustainability. It looks at how pension systems, rules and financing affect coverage, sufficiency, and distribution as well as fiscal and intergenerational sustainability and equality.
    Date: 2017–08
  4. By: Marta De Philippis (Bank of Italy)
    Abstract: This work analyzes the evolution of the labour force participation rate in Italy, as compared with the other main euro-area countries in the last decade. It breaks down the dynamics of the activity rate into the portion due to changes in the average socio-demographic characteristics of the population and that related to within socio-demographic group variations in the probability of participating. The results show that the main drivers of the increase in Italy’s participation rate are structural and long-lasting: they are mostly related to the rise in the population’s share of highly-educated individuals, who are more strongly attached to the labour market, and to the positive labour supply effects of the recent pension reforms. In the decade ahead, while socio-demographic forces are expected to stop providing a positive push to the aggregate activity rate, due to the ageing of the particularly numerous cohort of individuals born in the 1960s, the increase in the labour supply of women and of the elderly will continue to boost the overall labour force participation rate.
    Keywords: labour supply, demographic changes, pension reforms
    JEL: J21 J11
    Date: 2017–09
  5. By: Martín Caruso; Sebastian Galiani; Pablo Ibarrarán
    Abstract: This paper discusses theoretical and practical issues related to long-term care (LTC) services in Latin America. Demand for these services will rise as the region undergoes a swift demographic transition from its currently young population to a rapidly aging one, especially since the region’s aging cohorts are more prone to experience a decline in their functional and physical abilities than elderly people elsewhere in the world. We argue that private insurance markets are ill-equipped to provide coverage to meet the need for LTC, while the amount of personal savings required to afford self-insurance would be prohibitively high. We study how developed economies have dealt with the issue of LTC and pay special attention to the most salient features of their LTC programs. We then direct the discussion to Latin America, where LTC may not be an immediate priority, but governments are likely to encourage the development of LTC programs as demand for them steadily grows. In particular, policymakers are probably going to focus initially on LTC programs for the poor and vulnerable, for whom affordability of LTC is a greater problem. We therefore study how basic elements of policy design affect cost-effectiveness of LTC programs by means of a formal model. Our study shows that pro-poor programs are more cost effective when people have the option to receive cash subsidies, and the availability of in-kind and in-cash choices reduces program costs overall.
    JEL: J14
    Date: 2017–09
  6. By: Crusius, Tobias L.; von Werder, Marten
    Abstract: This study uses the German SAVE panel study in order to estimate the effect of intergenerational transfers on the expected retirement entry age of individuals. The literature in this field typically estimates the transfer effect on the actual retirement probability. We suggest to base the analysis on the expected retirement age instead. This entails two methodological advantages: First, it is possible to exploit the within individual variation for the entire sample (even of those who do not retire) and thereby permits to analyze the life-cycle considerations of younger age groups. Second, the effect size can easily be expressed in terms of time and thereby monetary opportunity costs. We find that heirs expect to retire earlier, even when receipts are expected to some degree. Specifically, heirs plan to retire four to five months earlier and thereby accept costs in the form of foregone income and pension entitlements corresponding to 20-30% of the inheritance.
    Date: 2017
  7. By: Quang Tran, Tuyen; Viet Nguyen, Cuong; Van Vu, Huong
    Abstract: By combining data from the 2011 Vietnam National Aging Survey and the 2011 Rural, Agricultural and Fishery Census, we examined whether expenditure inequality has any effect on happiness or life satisfaction among the elderly in rural Vietnam. We find that individuals who live in the communes with high inequality tend to self-report as being less happy, even after controlling for various individual and household attributes. The results are robust to the choice of inequality measures and the specification of econometric models. We also find that older rural people who are farmers or poor are more sensitive to inequality. Given that these people tend to be less happy than others, the result shows the risk that inequality further lowers their subjective well-being. The result supports the view that rural Vietnam is a less mobile society.
    Keywords: Elderly, Expenditure inequality, Social mobility, Subjective well-being, Rural Vietnam
    JEL: I3 I31 I32 I38
    Date: 2015–09–18
  8. By: Massimiliano, Bratti (European Commission – JRC); Tommaso, Frattini (Università degli Studi di Milano); Francesco, Scervini (Università degli Studi di Pavia)
    Abstract: In this paper, we exploit pension reform-induced changes in retirement eligibility requirements to assess the role of grandparental child care availability in the labor force participation of women with children under 15. We focus on Italy for two reasons: first, it has low rates of female employment and little formal child care provision, and second, it has undergone several pension reforms in a relatively short time span. Our analysis shows that, among the women studied, those whose own mothers are retirement eligible have a 11 percent higher probability of being in the labor force than those whose mothers are ineligible. The pension eligibility of maternal grandfathers and paternal grandparents, however, has no significant effect on the women’s labor force participation. We also demonstrate that the eligibility of maternal grandmothers mainly captures the effect of their availability for child care. Hence, pension reforms, by potentially robbing households of an important source of flexible, low-cost child care, could have unintended negative consequences for the employment rates of women with children.
    Keywords: grandparental child care, maternal employment, pension reform, retirement
    JEL: J13 J22
    Date: 2017–04
  9. By: Anek Belbase; Geoffrey T. Sanzenbacher
    Abstract: Research suggests that 0.3 percent of all adults have been appointed a legal guardian. While the requirements for being placed into guardianship can vary from state to state, a lack of decision-making capacity is a precondition. As a result, one would expect Social Security beneficiaries who have a guardian to also have their guardian act as a representative payee. Yet little is known about the relationship between guardianship and the Representative Payee Program. In response to a request from the Social Security Administration, this report uses the Survey of Income and Program Participation (SIPP) linked to the Social Security Master Beneficiary File and the Supplemental Security Record to investigate three questions: 1) how many beneficiaries with representative payees have guardians?; 2) how many beneficiaries have their guardian as their payee?; and 3) what are the characteristics of those with both a payee and a guardian. Because the SIPP does not include individuals residing in nursing homes, the project also examines data from the Health and Retirement Study, which does include these individuals.
    Date: 2017–08
  10. By: Gemmell, Norman
    Abstract: This paper examines the recently announced (March 2017) reforms to New Zealand Superannuation (NZS), raising the age of eligibility to 67 from 2037 and changing eligibility rules. With an ageing population, pensions that are indexed to wages and funded out of current tax revenues, there is much debate over the merits of existing and alternative NZS policy settings. But is this proposed reform the right call? The paper focuses particularly on the intergenerational consequences of current and reformed NZS settings, addressing two questions: (i) how are the reforms likely to impact on intergenerational equity?; and (ii) even if correct in principle, does the proposed implementation from 2037 represent unreasonable delay?
    Keywords: Superannuation, New Zealand Superannuation, Pensions, New Zealand,
    Date: 2017
  11. By: Leonardo Villar; Alejandro Becerra; David Forero
    Abstract: Desde el momento de su creación hasta el día de hoy, el sistema pensional colombiano ha presentado problemas estructurales y de diseño que han generado un alto costo económico y social para el país. Estos problemas no le han permitido al sistema reducir las inequidades que lo caracterizan y aumentar su cobertura, que en la actualidad es del orden de 23% de la población adulta mayor, muy baja en términos comparativos con la región latinoamericana y con países de niveles similares de desarrollo en otras partes del mundo. Peor aún, las proyecciones indican que dicha cobertura se reducirá aún más en el mediano y largo plazo, al mismo tiempo que se registran problemas de sostenibilidad financiera y regresividad, dado que el Estado tiene que girar anualmente cerca del 3.8% del PIB a un esquema cuyas prestaciones están concentradas en la población de mayores ingresos . Esto implica que el sistema pensional representa, al mismo tiempo, la política social más costosa para el Estado y la que tiene un impacto más negativo sobre la distribución del ingreso. Estas razones resaltan la urgencia de situar la reforma al sistema pensional como uno de los primeros puntos en la agenda de debate de políticas públicas en Colombia. La presente investigación se divide en cinco capítulos, sin contar esta introducción. En el primer capítulo se analizan experiencias internacionales relevantes en cuanto a reformas a los sistemas de protección económica a los adultos mayores; el segundo capítulo presenta estimativos de largo plazo de los costos sociales y económicos que surgirían de mantener las bajas tasas de cobertura pensional asociadas al régimen pensional actual en Colombia; el capítulo tercero muestra los criterios a tener en cuenta en el diseño de un Beneficio Universal, y la estimación del costo de su introducción; el cuarto capítulo discute diferentes mecanismos de interacción entre los pilares Contributivo y No Contributivo, con los cuales podrían minimizarse los posibles incentivos perversos a la informalidad que típicamente surgen ante la existencia de beneficios económicos provistos por el Estado; en el quinto capítulo se exploran alternativas de financiamiento para el sistema integral de protección económica para la vejez, incluyendo la posibilidad de que todo o parte de ese sistema sea financiado con impuestos generales en lugar de contribuciones de ahorro pensional. En ese mismo capítulo se estiman los efectos macroeconómicos y distributivos de cambios en ese esquema de financiamiento, usando para ello un modelo de Equilibrio General. Finalmente, en el sexto capítulo se concluye con las recomendaciones de política.
    Keywords: Sistemas de Pensiones, Pensiones de Jubilación, Reforma Pensional, Sistema de Protección Social, Adulto Mayor, Colombia
    JEL: H55 H75 J32
    Date: 2017–03–31
  12. By: Parisa Mahboubi (C.D. Howe Institute); Colin Busby (C.D. Howe Institute)
    Abstract: Closing the skills gap between working-age Indigenous and non-Indigenous Canadians is essential for the economic success of Canada’s Indigenous peoples, according to a report from the C.D. Howe Institute. In “Closing the Divide: Progress and Challenges in Adult Skills Development among Indigenous Peoples,” authors Parisa Mahboubi and Colin Busby find both progress and challenges in the adult skills development attained by off-reserve Indigenous people, particularly among those without a high-school education, and recommend solutions.
    Keywords: Education, Skills and Labour Market
    JEL: I2 J1 J2
  13. By: Ashton M. Verdery; Jonathan Daw; Colin Campbell; Rachel Margolis
    Abstract: This paper examines transfers of time and money between retirees and their children. It uses data from the Panel Study of Income Dynamics to test whether numbers of children, parent-child wealth differentials, geographic proximity, and gender contribute to racial and ethnic differences in transfers of time and money between retirement-aged adults and their children. Critical components of the analysis include measuring kin availability, the spatial and social embeddedness of family networks, supply as well as demand for transfers, and gender. Key limitations are that we exclude those who have no living family members with whom they could transfer, and we do not examine the role of non-familial transfers.
    Date: 2017–08
  14. By: Christopher J. Rook
    Abstract: Prior to the financial crisis mortgage securitization models increased in sophistication as did products built to insure against losses. Layers of complexity formed upon a foundation that could not support it and as the foundation crumbled the housing market followed. That foundation was the Gaussian copula which failed to correctly model failure-time correlations of derivative securities in duress. In retirement, surveys suggest the greatest fear is running out of money and as retirement decumulation models become increasingly sophisticated, large financial firms and robo-advisors may guarantee their success. Similar to an investment bank failure the event of retirement ruin is driven by outliers and correlations in times of stress. It would be desirable to have a foundation able to support the increased complexity before it forms however the industry currently relies upon similar Gaussian (or lognormal) dependence structures. We propose a multivariate density model having fixed marginals that is tractable and fits data which are skewed, heavy-tailed, multimodal, i.e., of arbitrary complexity allowing for a rich correlation structure. It is also ideal for stress-testing a retirement plan by fitting historical data seeded with black swan events. A preliminary section reviews all concepts before they are used and fully documented C/C++ source code is attached making the research self-contained. Lastly, we take the opportunity to challenge existing retirement finance dogma and also review some recent criticisms of retirement ruin probabilities and their suggested replacement metrics.
    Date: 2017–09
  15. By: Aurelio Bruzzo
    Abstract: Nel presente Quaderno si illustra la situazione socio-demografica presente in provincia di Ferrara, con particolare riferimento all’andamento naturale e sociale della popolazione e si esamina la consistenza dell’attuale immigrazione, proveniente da Paesi extra comunitari, al fine di stabilire se questa nuova linfa demografica possa diventare un effettivo fattore di ripresa del processo di sviluppo in ambito locale, nonostante le forti resistenze e perplessità attualmente prevalenti.
    Keywords: Demographic Trends; Immigrants; Housing; Local Economic Development
    JEL: J11 J15 O18 R11
    Date: 2017–09–06

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