nep-age New Economics Papers
on Economics of Ageing
Issue of 2018‒01‒29
nineteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Mortality Effects of Retirement: Evidence from Social Security Eligibility at Age 62 By Maria D. Fitzpatrick; Timothy J. Moore
  2. Working Paper 06-17 - Accrued-to-date pension entitlements in Belgium By Yves Brys
  3. Demographic Modeling Via 3-dimensional Markov Chains By Juan Jose Viquez; Alexander Campos; Jorge Loria; Luis Alfredo Mendoza; Jorge Aurelio Viquez
  4. NDC Schemes and Heterogeneity in Longevity: Proposals for Redesign By Holzmann, Robert; Alonso-García, Jennifer; Labit-Hardy, Heloise; Villegas, Andres M.
  5. Grandmothers' Labor Supply By Frimmel, Wolfgang; Halla, Martin; Schmidpeter, Bernhard; Winter-Ebmer, Rudolf
  6. The economic impacts of a social pension on recipient households with unequal access to markets in Uganda By Kuss, Maria Klara; Llewellin, Patrick; Gassmann, Franziska
  7. Major Changes in Japanese Public Pension System: Their Backgrounds and Underlying Philosophies By Takayama, Noriyuki
  8. The illusion of patient capital: evidence from pension investment policy in the Netherlands By Francesco Macheda
  9. A Mortality Model for Multi-populations A Semi-Parametric Approach By Lei Fang; Wolfgang K. Härdle; Juhyun Park
  10. Le déficit de cycle de vie en France : une évaluation pour la période 1979-2001 By Hippolyte D'Albis; Carole Bonnet; Julien Navaux; Jacques Pelletan; François-­charles Wolff
  11. Envisioning the future of territories to tackle demographic and employment challenges in sub-Saharan Africa By Jean-Michel Sourisseau; Nathalie Bougnoux; Jean-François Belieres; Robin Bourgeois; Mamy Soumaré; Patrick Rasolofo
  12. Should intra-familial time transfers be compensated financially? By Nataliya Kusa
  13. Several Questions on Basic Ideas of the 1994 World Bank Report "Averting the Old Age Crisis" By Takayama, Noriyuki
  14. Demographics and the Evolution of Global Imbalances By Sposi, Michael J.
  15. Fiscal sustainability and demographic change By Doorley, Karina
  16. Demographic Dividend & Economic Development in Arab Countries By Harkat, Tahar; Driouchi, Ahmed
  17. Directed technical change: A macro perspective on life cycle earnings profiles By Cragun, Randy; Tamura, Robert; Jerzmanowski, Michal
  18. The Age-Distribution of Earnings and the Decline in Labor's Share By Jacob Short; Andrew Glover
  19. Subsidising mature age employment or throwing coins Into a wishing well: a quasi-experimental analysis By Paulino Font; Mario Izquierdo; Sergio Puente

  1. By: Maria D. Fitzpatrick; Timothy J. Moore
    Abstract: Social Security eligibility begins at age 62, and approximately one third of Americans immediately claim at that age. We examine whether age 62 is associated with a discontinuous change in aggregate mortality, a key measure of population health. Using mortality data that covers the entire U.S. population and includes exact dates of birth and death, we document a robust two percent increase in male mortality immediately after age 62. The change in female mortality is smaller and imprecisely estimated. Additional analysis suggests that the increase in male mortality is connected to retirement from the labor force and associated lifestyle changes.
    JEL: H55 J14 J26
    Date: 2017–12
  2. By: Yves Brys
    Abstract: Supplementary table 29, “Accrued-to-date pension entitlements in social insurance” for Belgium will be published for the first time in 2017. This table covers the pension schemes in social insurance: statutory pensions and occupational pensions, whether they are funded or not. Table 29 shows the pensions entitlements on an accrued-to-date basis. These are present values of the pension entitlements of the retired population and the part of pension entitlements that is already accrued by the future beneficiaries. As such, accrued-to-date liabilities do not represent public debt and are not an indicator of the fiscal or financial sustainability of the pension systems and are only appropriate for national accounts purposes. Accrued-to-date liabilities should only be interpreted as an asset from the households in national accounts' terminology. An assessment of the sustainability of the pension systems can be found in the reports of the Ageing Working Group or the Belgian Study Commission for Ageing.
    Keywords: National accounts, Table 29, Supplementary table, Accrued-to-date liabilities, Pension entitlements, Eurostat
    JEL: C83 E01
    Date: 2017–05–31
  3. By: Juan Jose Viquez; Alexander Campos; Jorge Loria; Luis Alfredo Mendoza; Jorge Aurelio Viquez
    Abstract: This article presents a new model for demographic simulation which can be used to forecast and estimate the number of people in pension funds (contributors and retirees) as well as workers in a public institution. Furthermore, the model introduces opportunities to quantify the financial ows coming from future populations such as salaries, contributions, salary supplements, employer contribution to savings/pensions, among others. The implementation of this probabilistic model will be of great value in the actuarial toolbox, increasing the reliability of the estimations as well as allowing deeper demographic and financial analysis given the reach of the model. We introduce the mathematical model, its first moments, and how to adjust the required probabilities, showing at the end an example where the model was applied to a public institution with real data.
    Date: 2017–12
  4. By: Holzmann, Robert (University of New South Wales); Alonso-García, Jennifer (ARC Centre of Excellence in Population Ageing Research (CEPAR)); Labit-Hardy, Heloise (ARC Centre of Excellence in Population Ageing Research (CEPAR)); Villegas, Andres M. (UNSW Sydney)
    Abstract: Strong and rising empirical evidence across countries finds that longevity is highly heterogeneous in key socioeconomic characteristics, including income. A positive relationship between lifetime income and life expectancy at retirement amounts to a straight tax/subsidy mechanism when the average cohort life expectancy is applied for annuity calculation, as done under nonfinancial defined contribution (NDC) schemes. Such a regressive redistribution and the ensuing labor market distortion put into doubt main features of the NDC scheme and call for alternative benefit designs to compensate for the heterogeneity. This paper explores five key mechanisms of compensation: individualized annuities; individualized contribution rates/account allocations; a two-tier contribution structure with socialized and individual rate structure; and two supplementary approaches under the two-tier approach to deal with the income distribution tails, and the distortions above a ceiling and below a floor. Using unique data from England and Wales and the United States, the analysis indicates that both individualized annuities and a two-tier contribution scheme are feasible and effective and thus promising policy options. To this end, however, a de-pooling of gender will be required.
    Keywords: tax/subsidy structure, proxied life expectancy, two-tier contribution structure, gender de-pooling
    JEL: D9 G22 H55 J13 J14 J16
    Date: 2017–12
  5. By: Frimmel, Wolfgang (University of Linz); Halla, Martin (University of Linz); Schmidpeter, Bernhard (University of Essex); Winter-Ebmer, Rudolf (University of Linz)
    Abstract: The labor supply effects of becoming a grandmother are not well established in the empirical literature. We estimate the effect of becoming a grandmother on the labor supply decision of older workers. Under the assumption that grandmothers cannot predict the exact date of conception of their grandchild, we identify the effect of the first grandchild on employment (extensive margin). Our Timing-of-Events approach shows that having a first grandchild increases the probability of leaving prematurely the labor market. This effect is stronger when informal childcare is more valuable to the mother. To estimate the effect of an additional grandchild (intensive margin), we assume that the incidence of a twin birth among the third generation is not correlated with unobserved determinants of the grandmother's labor supply (first generation). Our respective 2SLS estimation shows a significant effect of further grandchildren. Our results highlight the important influence of the extended family on the decisions of older workers and point to mediating effects of different institutional settings.
    Keywords: grandchildren, female labor supply, timing of events, instrumental variables
    JEL: J13 J14 J22
    Date: 2017–12
  6. By: Kuss, Maria Klara (UNU-MERIT); Llewellin, Patrick (Maxwell Stamp PLC); Gassmann, Franziska (UNU-MERIT)
    Abstract: This paper analyses the differences in the economic impacts of social cash transfers (SCT) on recipients in remote and integrated areas. Using a mixed methods-research design and the case of Uganda's Senior Citizens Grant (SCG), the paper confirms that structural circumstances (such as market access) shape the economic outcomes of cash transfers for recipients. The findings of our case study show that there are vital differences in the dominant function of the SCG between recipient households living in areas with unequal structural circumstances. Recipient households in integrated areas are more likely to exploit the promotive potential of SCTs, while recipient households in remote areas utilise the SCT in a more protective manner. However, the findings also indicate that at times even recipient households in integrated areas are unable to tap into the promotive potential of SCTs given the limitations associated with their age and fragility.
    Keywords: Cash transfers, social pension, market access, livelihood outcomes, Uganda
    JEL: H53 H55 I38
    Date: 2018–01–24
  7. By: Takayama, Noriyuki
    Date: 2017–12
  8. By: Francesco Macheda
    Abstract: This paper takes issue with the popular idea that the involvement of labor unions within occupational pension funds would hinder short-term profit-maximizing strategies that instead characterizes private pension schemes in Anglo-Saxon countries. The aim is to contribute to demystifying this myth by looking at private pension institutions under the assumption that deregulated financial markets are not neutral and engender a network of power relationships which goes beyond direct market participants. The thesis of this paper is that the high profitability generated by speculative investments leads to a new political compromise between firms and organized labor, insofar as the buying and selling of easily liquidated assets by occupational pension funds guarantees high net-salary levels and generous pensions, without undermining the competitiveness of the firm – at least in the short run. On the other hand, however, it dramatically increases the intrinsic risk of a pension system that, in fact, depends on the state of health of global finance. Finally, we test our hypothesis by examining the investment strategies in the Netherlands, where occupational pension funds have been historically embedded within the structure of neo-corporative interest mediation.
    Keywords: Private Pensions, Labor unions, Power, Investment Decisions
    JEL: J32 J51 G11
    Date: 2018–01
  9. By: Lei Fang; Wolfgang K. Härdle; Juhyun Park
    Abstract: Mortality is different across countries, states and regions. Several empirical research works however reveal that mortality trends exhibit a common pattern and show similar structures across populations. The key element in analyzing mortality rate is a time-varying indicator curve. Our main interest lies in validating the existence of the common trends among these curves, the similar gender differences and their variability in location among the curves at the national level. Motivated by the empirical findings, we make the study of estimating and forecasting mortality rates based on a semi-parametric approach, which is applied to multiple curves with the shape-related nonlinear variation. This approach allows us to capture the common features contained in the curve functions and meanwhile provides the possibility to characterize the nonlinear variation via a few deviation parameters. These parameters carry an instructive summary of the time-varying curve functions and can be further used to make a suggestive forecast analysis for countries with barren data sets. In this research the model is illustrated with mortality rates of Japan and China, and extended to incorporate more countries. All numerical procedures are transparent and reproduced on
    Keywords: Nonparametric smoothing, Parametric modeling, Common trend, Mortality,; Lee-Carter method, Multi-populations
    JEL: C14 C32 C38 J11 J13
    Date: 2016–03
  10. By: Hippolyte D'Albis (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Carole Bonnet (INED - Institut national d'études démographiques); Julien Navaux (University of Ottawa [Ottawa]); Jacques Pelletan (UP8 - Université Paris 8, Vincennes-Saint-Denis); François-­charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes, INED - Institut national d'études démographiques)
    Date: 2017–03–01
  11. By: Jean-Michel Sourisseau (ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UM3 - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique); Nathalie Bougnoux (AFD - Agence française de développement); Jean-François Belieres (ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UM3 - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique); Robin Bourgeois (ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UM3 - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique); Mamy Soumaré (IER - Institut d'Economie Rurale - Mali - institut Economie); Patrick Rasolofo (IISS - Institut international des sciences sociales)
    Abstract: In sub-Saharan Africa, the magnitude of the demographic challenge implies anticipating targets to be reached within the time horizon of the next generation, in all sectors of activity. We propose an operational methodology that can be implemented by policymakers and actors in rural territories to envision the future and to prepare their development strategy. This territorial foresight methodology combines an analysis of past local dynamics, a 20-year population projection and a participatory foresight process. It enables collective thinking on sustainable paths and provides a framework for monitoring and steering public territorial action.
    Keywords: local governance, population projection, agriculture, scenario, local actors,Public policy, decentralisation, foresight, Mali, Madagascar
    Date: 2017
  12. By: Nataliya Kusa (University of Kassel)
    Abstract: This paper deals with social acceptance of applying the equity principle for intra-familial time transfers. Based on a representative survey among German citizens, the author provides empirical evidence on acceptance of financial compensation for different time transfers. Some 80% of the subjects stated that intra-familial long-term care should be compensated. At the same time, only 38% of subjects stated that grandparental childcare should be compensated: The majority accepts equity principle for intra-familial long-term care but not for grandparental childcare. Age has the strongest effect: subjects belonging to the old generation are more likely to accept the equity principle for informal long-term care as well as for grandparental childcare. Family valuation does not matter in any of the dimensions. It is puzzling that being a female by itself does not explain the differences in social acceptance even though females are much more actively involved in all types of time transfers.
    Keywords: intergenerational transfers, long-term care, grandparental childcare, citizens’ view, equity
    JEL: D31 D63 D64
    Date: 2018
  13. By: Takayama, Noriyuki
    Date: 2017–10
  14. By: Sposi, Michael J. (Federal Reserve Bank of Dallas)
    Abstract: The working age share of the population has evolved, and will continue to evolve, asymmetrically across countries. I develop a dynamic, multicountry, Ricardian trade model with endogenous labor supply to quantify how these asymmetries systematically affect the pattern of trade imbalances across 28 countries from 1970-2014. Changes in both domestic and foreign working age shares impact a country's net exports directly through the demand for net saving and indirectly through relative labor supply and population growth. Counterfactually removing demographic-induced changes to saving unveils a strong negative contemporaneous relationship between net exports and productivity growth. Demographics, thus, alleviate the allocation puzzle, and do so to a greater degree than investment distortions. Neither labor market distortions nor trade distortions systematically reconcile the puzzle.
    JEL: F11 F21 J11
    Date: 2017–12–01
  15. By: Doorley, Karina
    Date: 2017
  16. By: Harkat, Tahar; Driouchi, Ahmed
    Abstract: Abstract The demographic dividend is the window of opportunity provided by changes in the age structure of a population. It occurs because of the decline of both fertility and mortality rates. Data from the World Bank are used for descriptive statistics, regression analyzes with and without robust standard-errors, in addition to performing Granger-Causality tests. The results indicate that estimated time trends for fertility and mortality are significantly decreasing for Arab countries. Findings also indicate that the demographic dividend has occurred in the recent decade in most of Arab countries except for Egypt. This paper shows also the causal links between the dependency ratio (change in the population age structure) and the working age population, unemployment, economic development, government and private expenditures on health and education, education, and female participation in education variables.
    Keywords: Keywords: Demographic Dividend, Arab Countries, Granger Causality.
    JEL: J11 J13 O11
    Date: 2017–11–22
  17. By: Cragun, Randy; Tamura, Robert; Jerzmanowski, Michal
    Abstract: We propose a new macroeconomic mechanism for generating patterns in age-earnings profiles based on directed technical change. The mechanism does not depend on changes in the human capital of the individual; rather differences in the human capital shares of age groups affect the profitability of developing age-specific technologies, biasing innovation toward improving the productivity of workers whose cohorts provide large shares of the labor force's human capital. The theory should be taken as supplemental to (rather than replacing) human-capital-based theories of age-earnings profiles. Using recently developed data and human capital estimates, we simulate reductions in wages due to age-biased directed technical change over workers' lives for most of the world's nations over two centuries. Our simulations indicate that age-specific directed technical change contributes to wage concavity for the average country by cohort group. Because younger workers make up a larger share of human capital in most years and countries, most cohorts in most countries experienced wage gains early in life and losses later in life from age-specific directed technology, making life-cycle earnings profiles flatter. The late-life losses are larger than the early-life gains, increasing concavity in life-cycle earnings profiles. We also calculate the present value of lifetime wage gains from age-specific endogenous technology, and find particularly large and economically-significant gains for baby boomers and losses for cohorts born during low population growth periods.
    Keywords: Directed technical change, directed technology, human capital, experience, wage profile, wage differential, age-earnings profile, endogenous technology
    JEL: J11 J24 J31 O31 O33 O4
    Date: 2017–11–20
  18. By: Jacob Short (University of Western Ontario); Andrew Glover (University of Texas Austin)
    Abstract: We estimate the effect of the age-distribution of earnings on factor shares of income. We derive an income accounting formula when wages differ from marginal products by a proportional earnings wedge that varies over age and time. Under this generalized wage-setting, the age-distribution of earnings affects labor's share even if production is Cobb Douglas. We estimate the age-profile of earnings wedges using cross-sectoral data. Our estimates imply a rising wedge over the lifecycle, with sixty-five year olds receiving about one third of their marginal product relative to twenty-five year olds. Our estimates imply that 75% of the post-2000 decline in US labor's share is due to aging and that many countries have likely experience age-related declines in labor's share in recent years.
    Date: 2017
  19. By: Paulino Font (Banco de España); Mario Izquierdo (Banco de España); Sergio Puente (Banco de España)
    Abstract: This paper evaluates the effect that subsidies to employment maintenance have on the probability of mature age workers staying in the firm. Implementing a quasi-experimental design provided by changes in Spanish labour market regulations, we are able to estimate that subsidy removal had a small though significant impact on the workers’ firm attachment rate. Our results show that a 1 pp increase in the worker’s cost translates into a 0.11 pp increase in the cumulative probability of the worker separating from the firm in the next five months. This effect was mainly driven by workers with relatively less seniority in the firm, who present lower dismissal costs, and by workers in low-skill jobs, for which the wageproductivity gap seems to negatively evolve with age. In terms of cost-benefit analysis, we document that the previous higher rate of job maintenance was achieved at a disproportionate cost, and therefore the elimination of the subsidy resulted in Social Security efficiency gains.
    Keywords: deadweight loss, labour tax subsidy, labour demand, dismissal costs
    JEL: H21 H31 J23 J32
    Date: 2017–11

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