nep-age New Economics Papers
on Economics of Ageing
Issue of 2018‒07‒09
thirteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Economic security of minimum old-age pensions in age groups of older adults in Cuba By José Estrada Hernández; María de Las Mercedes Ivonet Munder
  2. The Effects of Means-tested, Noncontributory Pensions on Poverty and Well-being: Evidence from the Chilean Pension Reforms By Italo López García; Andrés Otero
  3. Population aging and housing prices: who are we calling old? By Ye Jin Heo
  4. Pension reform: Disentangling retirement and savings responses By Lindeboom, M.; Montizaan, Raymond
  5. Older Men’s Labor Force Participation in Belgium By Alain Jousten; Mathieu Lefebvre
  6. Ageing, the socioeconomic burden, labour market and migration. The Chinese case in an international perspective By Bruni, Michele
  7. Health and income: testing for causality on European elderly people By Amélie Adeline; Eric Delattre
  8. Human capital accumulation through recurrent education By Mariko Tanaka
  9. Labor Market and Distributional Effects of an Increase in the Retirement Age By Johannes Geyer; Peter Haan; Anna Hammerschmid; Michael Peters
  10. Sustainability of the pension system in Macedonia: A comprehensive analysis and reform proposal with MK-PENS - dynamic microsimulation model By Blagica Petreski; Pavle Gacov
  11. Long Term Care Risk Misperceptions By Martin Boyer; Philippe De Donder; Claude Fluet; Marie-Louise Leroux; Pierre-Carl Michaud
  12. Driving by the Elderly and their Awareness of their Driving Difficulties (Hebrew) By Idit Sohlberg
  13. Your Retirement and My Health Behavior: Evidence on Retirement Externalities from a fuzzy regression discontinuity design By Tobias Mueller, Mujaheed Shaikh

  1. By: José Estrada Hernández (Universidad de Oriente [Cuba]); María de Las Mercedes Ivonet Munder (Universidad de Oriente [Cuba])
    Abstract: Economic security is a goal of comprehensive social protection, dimension of the policy of old age and key element in the quality of life. Its scope differs according to the degree of demographic transition, economic development and state protection goals. In Cuba through Law 105/08, monthly access to the minimum old-age pension is guaranteed. This paper proposes a structured index in eight dimensions and determined with the support of multivariate analysis and the applications of SPSS V.22, Which allows a methodological basis to address the public, integral and social management of aging.
    Abstract: La seguridad económica es meta de protección social integral, dimensión de la política de vejez y elemento clave en la calidad de vida. Su alcance difiere según sea el grado de transición demográfica, de desarrollo económico y metas de protección estatales. En Cuba mediante la ley 105/08 se garantiza el acceso mensual a la pensión mínima de vejez. Con el presente trabajo se propone un índice estructurado en ocho dimensiones y determinado con el apoyo del análisis multivariante y las aplicaciones del SPSS V.22, lo que posibilita una base metodológica para afrontar la gestión pública, integral y social del envejecimiento.
    Date: 2017–11–25
  2. By: Italo López García (RAND Corporation); Andrés Otero (Chilean Pension Regulator)
    Abstract: Chile initiated in 1981 a privately managed, individual-account pension system that inspired similar reforms in many Latin American countries, and that has been considered as a possible model for Social Security in the United States. After 30 years in place, the Chilean pension system has been criticized for replicating existing inequalities in labor markets and increasing the risk of old-age poverty; for achieving lower levels of coverage; and for providing low pension benefits. Aiming at guaranteeing a minimum level of consumption upon retirement and increasing the incentives to contribute, in 2008 Chile reformed the Pension System, widening the welfare tier and improving the contributory tier through a means-testing scheme. This paper examines the impact of the 2008 Chilean pension on labor supply and well-being, using a version of the difference-in-difference estimator that assesses the effects of the reform through exogenous changes in pension wealth. Using longitudinal data from 2006 through 2012, and a sample of individuals that were not retired by the time of the implementation of the reforms, our preliminary estimates suggest that the pension reforms induced an increase in the probability of working formally, but at least among females, they reduced labor market participation. However, we find limited impacts of the reform on nonlabor outcomes. Besides some improvements in aggregate household expenditures and in measures of subjective well-being measures among males, we do not detect robust changes in health and well-being among individuals near retirement.
    Date: 2017–02
  3. By: Ye Jin Heo (Graduate Institute of International and Development Studies)
    Abstract: This paper empirically studies through which channel - between short expected remaining life and withdrawal from the labor market - population aging affects real house price more and how the effect can vary if old-age population is defined alternatively in a way to reflect different aspects of aging, using a panel data of OECD countries. It finds that the main driver of a negative relationship between aging and real house price comes from the later stage of life and not immediately after the age of 65 or retirement. It also shows that the effective retirement age matters more in explaining the relationship between aging and real house price than the age 65, since the share of retired population has a nonlinear effect on real house price, while the standard old-age population aged over 65 does not. When I project future real house price, the standard old-age population only predicts a further decrease in real house price as aging continues, whereas the retired population captures a positive marginal effect and leaves room for policy intervention.
    Keywords: J11, G12, R21
    JEL: J11 G12 R21
    Date: 2018
  4. By: Lindeboom, M.; Montizaan, Raymond (ROA / Dynamics of the labour market)
    Abstract: In January 2006, the Dutch government implemented a pension reform that substantially reduced the public pension wealth of workers born in 1950 or later. At the same time, a tax-facilitated savings plan was introduced that substantially reduced the saving costs of all workers, irrespective of birth year. This paper uses linked administrative and survey data to assess the effect of the reform on the savings and retirement expectations and realizations of two virtually identical male cohorts that differ only in treatment status, the treated having been born in 1950 and the controls having been born in 1949. We show that retirement expectations are in line with realizations and that the reform had the intended effect on the labor supply for the larger part of the workers, namely, those without sufficient means to substantially increase private savings to counter the effect of the reform. These workers, who are generally in worse health, have zero substitution rates between private and public wealth. On the other hand, there is a group of mostly high-wage workers who participate in the tax-facilitated Life Course Savings Scheme and who increase private savings to fully counter the impact of the drop in public wealth. A further, unintended side effect of the introduction of the tax-facilitated savings plan is that high wage earners who are not affected by the drop in pension wealth retire even sooner than initially planned.
    Keywords: natural experiment, regression discontinuity, retirement, private wealth, public wealth, crowding out, substitution rate
    JEL: J26 H55 J14
    Date: 2018
  5. By: Alain Jousten; Mathieu Lefebvre
    Abstract: The paper studies the labor market participation of older workers in Belgium over the last 3 decades. It outlines the changes to the institutional framework of relevance for labor market participation and employment. Drawing on data from the European Union Labour Force Survey (LFS) over the period 1983-2013, we provide evidence of the trends in participation in (early-) retirement routes. We also explore how the jobs occupied by older workers have changed over time, both in terms of their “quality” and the “quantity” of work involved. Part-time work is found to become more common, though with different attributes for men and women.
    JEL: H55 J11 J21 J26 I38
    Date: 2018–05
  6. By: Bruni, Michele
    Abstract: China still lags behind Europe along the path of the demographic transition and therefore is still much younger. However, due to the speed with which the fertility rate dropped and life expectancy increased, China ageing process will proceed at a very fast space and around the middle of the century the population of China is projected to be as old as that of France and the UK and older than that of the USA. The paper tries to evaluate the labour market and welfare implications of this process, also by an economic indicator of dependency and socioeconomic burden.
    Keywords: Ageing,China,EU,dependency indicators,technological change,migrations
    JEL: J11 J14 J21 F22 O33
    Date: 2018
  7. By: Amélie Adeline; Eric Delattre (Université de Cergy-Pontoise, THEMA)
    Abstract: Socioeconomic status and health are positively related, also known as the "healthincome gradient". However, when considering the causal impact of income on health, the reverse causality might be at play. Income inequalities are an important factor in health inequality such that policy makers who aim at improving general health or narrowing inequalities using public policies, need to understand the sources and the direction of the causality between income and health. We thus investigate bivariate causal effects between the two by highlighting the Granger causality. Using the Survey of Health, Aging and Retirement in Europe (SHARE), we find evidence of persistent causal effects running from income to health and from health to income. Results, using a Full Information Maximum Likelihood estimator (FIML), suggest that considering a simultaneous equations approach is required because there are unobservable factors common to both equations in the individual e ects (statistically significant correlation between the two equations).
    Keywords: Granger causality; income; simultaneity; self-assessed health; FIML.
    JEL: C32 C33 D31 I10 J14
    Date: 2018
  8. By: Mariko Tanaka
    Abstract: Sustaining economic growth under rapid aging is one of the most important policy issues in Japan. Because of the difficulty of increasing labor force in an aging society, it is desirable to promote human capital accumulation for improvement of labor quality in the long run. However, since human capital accumulated in the young may become obsolete for elder workers, we cannot achieve sufficient level of human capital to sustain economic growth only through education for the young. Thus, we need recurrent education for the elderly or retired female workers in an aging society as in Japan. Hence, this paper investigates whether we can achieve socially optimal level of human capital when the decision to participate in recurrent education is left to the private sector.
    Date: 2018–03
  9. By: Johannes Geyer; Peter Haan; Anna Hammerschmid; Michael Peters
    Abstract: We evaluate the labor market and distributional effects of an increase in the early retirement age (ERA) from 60 to 63 for women. We use a regression discontinuity design which exploits the immediate increase in the ERA between women born in 1951 and 1952. The analysis is based on the German micro census which includes about 370,000 households per year. We focus on heterogeneous labor market effects on the individual and on the household level and we study the distributional implications using net household income. In this respect we extend the previous literature which mainly studied employment effects on the individual level. Our results show sizable labor market effects which strongly differ by subgroups. We document larger employment effects for women who cannot rely on other income on the household level, e.g. women with a low income partner. The distributional analysis shows on average no significant effects on female or household income. This result holds as well for heterogeneous groups: Even for the most vulnerable groups, such as single women, women without higher education, or low partner income, we do not find significant reductions in income. One reason for this result is program substitution.
    Keywords: retirement age, pension reform, labor supply, early retirement, distributional effects, spillover effects, household
    JEL: J14 J18 J22 J26 H31
    Date: 2018
  10. By: Blagica Petreski; Pavle Gacov
    Date: 2018–02
  11. By: Martin Boyer; Philippe De Donder; Claude Fluet; Marie-Louise Leroux; Pierre-Carl Michaud
    Abstract: This paper reports survey evidence on long-term care (LTC) risk misperceptions and demand for long-term care insurance (LTCI) in Canada. LTC risk misperceptions is divided into three different risks: needing help for at least one activity of daily life, needing access to a nursing home, and living to be 85 years old. We contrast subjective (i.e. stated) probabilities with actual probabilities for these three dimensions. We first provide descriptive statistics of how objective and subjective probabilities differ and correlate to each other. Second, we study cross-correlations between different types of risks. We then study how risk misperceptions correlate with individual characteristics, and evaluate how misperceptions affect intentions and actual purchase of LTCI. Our conclusions are two-fold. First, we find that most subjects are not well informed about their individual LTC risks, making it difficult for them to take the correct LTCI decisions. Second, and even though misperceptions explain an individuals actual or his intentions to take-up LTCI, misperceptions are unlikely to explain the poor take-up rate of LTCI in our sample.
    Keywords: long-term care insurance puzzle, disability, misperceptions, subjective probability
    JEL: D91 I13
    Date: 2018
  12. By: Idit Sohlberg
    Abstract: In the past twenty years the number of elderly drivers has increased for two reasons. one is the higher proportion of elderly in the population, and the other is the rise in the share of the elderly who drive. This paper examines the features of their driving and the level of their awareness of problems relating to it, by analysis preference survey that included interviews with 205 drivers aged between 70 and 80. The interviewees exhibited a level of optimism and self confidence in their driving that is out of line with the real situation. There is also a discrepancy between how their driving is viewed by others and their own assessment, and between their self assessment and their assessment of the driving of other elderly drivers, which they rate lower than their own. they attributed great importance to safety feature in cars, although they did not think that they themselves needed them, and most elderly drivers did not think there was any reason that they should stop driving, despite suggestions from family members and others that they should do so. A declared preference survey was undertaken to assess the degree of difficulty elderly drivers attribute to driving conditions. It was found that they are concerned mainly about weather condition, driving at night, and long journeys. Worry about night driving was most marked among women, the oldest drivers, and those who drove less frequently. In light of the findings, imposing greater responsibility on the health system should be considered. Consideration should also be given to issuing partial licenses to the elderly for daytime driving only, or restricted to certain weather conditions, dependent on their medical condition. Such flexibility will enable the elderly to maintain their life style and independence for a longer period on the one hand, and on the other, will minimize the risks to themselves and other.
    Date: 2018–06
  13. By: Tobias Mueller, Mujaheed Shaikh
    Abstract: This paper presents evidence on intra-household retirement externalities by assessing the causal e ect of spousal retirement on various health behaviors and health status across 19 European countries. We identify partner's and own retirement e ects by applying a fuzzy regression discontinuity design using retirement eligibility as exogenous instruments for spousal and own retirement status. We nd signi cant increases in the frequency and intensity of alcohol consumption combined with a signi cant decrease in moderate physical activities as a response to partner's retirement. In line with the existing literature, we nd that own retirement has signi cant positive e ects on engaging in moderate and vigorous physical activities but also leads to a signi cant increase in the frequency of alcohol intake. Overall, subjective health is negatively a ected by spousal retirement and positively by own retirement.
    Keywords: Retirement Externalities, Health behavior, Fuzzy Regression Discontinuity Design
    JEL: J26 I12 C26
    Date: 2017–08

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