nep-age New Economics Papers
on Economics of Ageing
Issue of 2018‒10‒01
fifteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Poverty among the elderly: The role of public pension systems By JACQUES Philippe,; LEROUX Marie-Louise,; STEVANOVIC Dalibor,
  2. Minimum Wages and Retirement By Borgschulte, Mark; Cho, Heepyung
  3. Decentralized policies and formal care use by the disabled elderly By Quitterie Roquebert; Remi Kabore; Jerome Wittwer
  4. Re-estimating the Gainful Employment Rate of Older Men: the United States, 1870 to 1930. By Gardner, John; Gratton, Brian; Moen, Jon
  5. A Probabilistic Cohort-Component Model for Population Forecasting - The Case of Germany By Vanella, Patrizio; Deschermeier, Philipp
  6. The Life Expectancy of Older Couples And Surviving Spouses By Janice Compton; Robert A. Pollak
  7. Optimal Taxation of Inheritance and Retirement Savings By Yena Park
  8. Evaluating Health Shocks on Agricultural Labor Supply of Mid-aged and Older Population in China By Wang, Yumeng; Yao, Weihang; Liu, Donald J.; Kong, Xiangzhi
  9. Forced Retirement Risk and Portfolio Choice By Guodong Chen; Minjoon Lee; Tong-yob Nam
  10. Going into the Greek Crisis: reflections from George Papandreou By Antigone Lyberaki; Platon Tinios
  11. Comparing the Effects of Current Pay and Defined Benefit Pensions on Employee Retention: Working Paper 2018-06 By Justin Falk; Nadia Karamcheva
  12. The best indexation of public pensions: the point system By Andras Simonovits
  13. Healthcare Utilization at Retirement: The Role of the Opportunity Cost of Time By Lucifora, Claudio; Vigani, Daria
  14. The growing American health penalty: International trends in the employment of older workers with poor health By Ben Baumberg Geiger; René Böheim; Thomas Leoni
  15. Potential Rural Impacts of Pension Reductions By Miller, Steven R.; Deller, Steven C.; Stallmann, Judith I.

  1. By: JACQUES Philippe, (Analysis Group, Montréal); LEROUX Marie-Louise, (Université du Québec à Montréal); STEVANOVIC Dalibor, (Université du Québec à Montréal)
    Abstract: The objective of this paper is to measure the impact of first-pillar public pensions spending on the prevalence of poverty among the elderly. Using data from 27 European countries from 1995 to 2014, we estimate the elasticity of the poverty rate among individuals aged over 65 years to per capita public pension spending. We show the existence of a nonlinear relationship between these two variables. The elasticity is negative and statistically different from 0 only beyond a level of spending of 685€ per capita. At the average value of 2,819€, it is estimated that the elasticity is about -1.45. This nonlinear relation is robust to the treatment of possible endogeneity and to different robustness checks like the variation of the poverty line, and the inclusion of country-specific differences in public pension plans.
    Keywords: ageing, poveorty, income inequalities, public pension systems, panel data
    JEL: H55 I32 I38
    Date: 2018–08–31
  2. By: Borgschulte, Mark (University of Illinois at Urbana-Champaign); Cho, Heepyung (University of Illinois at Urbana-Champaign)
    Abstract: We study the effect of the minimum wage on the employment outcomes and Social Security claiming of older US workers from 1983 to 2016. The probability of work at or near the minimum wage increases substantially near retirement, and previous researchers and policies suggest that older workers may be particularly vulnerable to any disemployment effects of the minimum wage. We find no evidence that the minimum wage causes earlier retirements. Instead, our estimates suggest that higher minimum wages increase earnings and may have small positive effects on the labor supply of workers in the key ages of 62 to 70. Consistent with increased earnings and delayed retirement, higher minimum wages decrease the number of Social Security beneficiaries and amount of benefits disbursed. The minimum wage appears to increase financial resources for workers near retirement.
    Keywords: minimum wage, retirement, social security claiming
    JEL: H55 J26 J38 J42
    Date: 2018–08
  3. By: Quitterie Roquebert (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); Remi Kabore (ISPED - Institut de Santé Publique, d'Epidémiologie et de Développement - Université Bordeaux Segalen - Bordeaux 2); Jerome Wittwer (ISPED - Institut de Santé Publique, d'Epidémiologie et de Développement - Université Bordeaux Segalen - Bordeaux 2)
    Abstract: In a context of population ageing, public policies encourage the utilization of pro- fessional home care for the elderly living in the community. This chapter studies the determinants of professional home care use by the disabled elderly in the French con- text. It focuses on the e_ects of the regulation of the supply and the generosity of public _nancing. We use departmental variations in both the regulation of providers and the implementation of the main program devoted to the disabled elderly, the APA policy. We exploit an original survey on departmental practices matched with the HSM survey to estimate the determinants of formal care use, at the extensive margin. We _nd no e_ect of the departmental generosity while, on the supply side, when non-regulated providers | whose quality is uncertain and price is lightly regulated | dominate the market, the disabled elderly have a lower probability to use formal home care. Our results contribute to discuss both the questions raised by the decentralization of a national policy and the recent reform of the home care sector requiring all home care structures to be regulated.
    Keywords: long-term care,home care,supply regulation,decentralization
    Date: 2018–09
  4. By: Gardner, John; Gratton, Brian; Moen, Jon
    Abstract: Analyses of the economic effects of the introduction of the public pension system on older men in the US have been hamstrung by difficulties generating reliable estimates of historical labor-force participation rates using data from early US censuses that only asked respondents about their occupations and not whether they were actively employed. We extend a unique feature of the 1901 Canadian census, which asked about retirement status as well as occupation, to older men in the 1900 US Census to estimate labor-force participation rates that adjust for misreporting of employment status. Our estimates show that reported rates substantially overestimate labor-force participation among older men. We also show that adjusted rates based on an econometric correction for misclassified limited dependent variables produces are similar to those based on the 1901 Canadian census. Using this technique to extend our adjustment shows that reported rates overstate older men’s labor-force participation rates in the 1880, 1910, 1920 and 1930 census, as well as the decline in those rates between 1900 and 1910.
    Keywords: Retirement, census, gainful employment, misclassification
    JEL: N31 N32
    Date: 2018–04
  5. By: Vanella, Patrizio; Deschermeier, Philipp
    Abstract: The future development of population size and structure is of importance since planning in many areas of politics and business is conducted based on expectations about the future makeup of the population. Countries with both decreasing mortality and low fertility rates, which is the case for most countries in Europe, urgently need adequate population forecasts to identify future problems regarding social security systems as one determinant of overall macroeconomic development. This contribution proposes a stochastic cohort-component model that uses simulation techniques based on stochastic models for fertility, migration and mortality to forecast the population by age and sex. We specifically focus on quantifying the uncertainty of future development as previous studies have tended to underestimate future risk. The results provide detailed insight into the future population structure, disaggregated into both sexes and 116 age groups. Moreover, the uncertainty in the forecast is quantified as prediction intervals for each subgroup. The underlying models for forecasting the demographic components have been developed in earlier studies and rely on principal component time series models. Since the proposed model is fully probabilistic, it offers a wide range of information, not only identifying the most probable course of the population but also a vast number of possible scenarios for future development of the population and quantifying their respective likelihoods. The model is applied to forecast the population of Germany until 2040. The results indicate a larger future population for Germany compared to the population predicted in studies conducted before 2015. The driving factors are lower mortality, higher fertility and higher net migration as derived by us statistically in contrast to widely used qualitative assumptions. The present study shows that the increase in population is mainly due to a larger proportion of older individuals.
    Keywords: Population Forecasting, Stochastic Simulation, Cohort-Component Methods, Principal Component Analysis, Time Series Analysis
    JEL: C22 C53 J11
    Date: 2018–09
  6. By: Janice Compton; Robert A. Pollak
    Abstract: Individual life expectancies are easy to calculate from individual mortality rates and provide useful summary measures for individuals making retirement decisions and for policy makers. For couples, analogous measures are the expected years both spouses will be alive (joint life expectancy) and the expected years the surviving spouse will spend as a widow or widower (survivor life expectancy). Using individual life expectancies to calculate summary measures for couples yields substantially misleading results because the mortality distribution of husbands and wives overlap substantially. To illustrate, consider a wife aged 60 whose husband is 62. In 2010, the wife's life expectancy was 24.5 years and her husband's 20.2 years. The couple's joint life expectancy, however, is only 17.7 years. Although her life expectancy is four years longer than his, if she is widowed (probability: .62), her survivor life expectancy is 12.5 years; if the husband is a widower (probability: .38), his survivor life expectancy is 9.5 years. We calculate trends and patterns in joint and survivor life expectancy in each census year from 1930 to 2010. Using 2010 data, we also investigate differences in joint and survivor life expectancy by race and ethnicity and by education.
    JEL: J1
    Date: 2018–09
  7. By: Yena Park (University of Rochester)
    Abstract: We study how to jointly design the optimal tax system on the inherited wealth and the retirement savings in an economy where the motives for the retirement savings and the bequests are overlapping. If the retirement savings can serve for both a precautionary saving against the uncertain life cycle and a bequest to the children, the optimal tax system should consider the interaction of the two functions. When the parents are heterogeneous in their earning ability, mortality, and altruism, the correlation of these characteristics and the planner's preferences for redistribution are the key determinant of the sign and shape of the tax system.
    Date: 2018
  8. By: Wang, Yumeng; Yao, Weihang; Liu, Donald J.; Kong, Xiangzhi
    Abstract: The current study used the Heckman two-stage model to analyze the influences of chronic and acute diseases on the agricultural labor participation and time input of middle aged and older rural populations. The data was based on the mid-aged and older rural people from national baseline survey in China Health and Retirement Longitudinal Study (CHARLS) from 2011 and 2013. Results indicated that chronic diseases did not have an influence on the participation of mid-aged and older people in agriculture, but labor time was decreased. Acute diseases decreased both labor time and probability of participation.
    Keywords: Community/Rural/Urban Development, Health Economics and Policy
    Date: 2017–05–23
  9. By: Guodong Chen (Department of Finance, New York University at Shanghai); Minjoon Lee (Department of Economics, Carleton University); Tong-yob Nam (Office of the Comptroller of the Currency, U.S. Department of Treasury)
    Abstract: The literature on the effect of labor income on portfolio choice overlooks that workers face a risk of being forced to retire before their planned retirement age. Using the Health and Retirement Study data, this paper finds the forced retirement risk to be significant and also highly correlated with stock market fluctuations. A life-cycle portfolio choice model with the estimated forced retirement risk shows that the labor income of those subject to the risk of forced retirement becomes stock-like as individuals approach retirement. Therefore, contrary to conventional wisdom, those who are still working but close to retirement should have a lower share of risky assets in their financial portfolios than retirees do. Given that most financial assets are held by middle-aged households, this finding gives an alternative explanation to the risk premium puzzle.
    Keywords: Forced Retirement, Portfolio Choice, the Risk Premium Puzzle
    JEL: D14 E11 G11 G12
    Date: 2018–06–20
  10. By: Antigone Lyberaki; Platon Tinios
    Abstract: The paper examines Long Term Care (LTC) in Greece over the crisis. It does so through examining micro data from the 2007 and 2015 waves of the Survey of Health, Ageing and Retirement and Europe (SHARE. The crisis was exceptionally deep and involved retrenchments in public welfare, superimposed on a familial LTC system. Hence, the ‘austerity narrative’, expects cutbacks to have led to deteriorating outcomes and to rising informal provision. The empirical investigation casts doubt on these expectations: First, LTC needs did not rise, despite a deterioration in health. Second, ‘care gaps’ – people declaring need who receive no care – shrank, despite austerity. Third, it was (paid) professional care, rather than informal care which rose, despite the familial LTC system. Fourth, care in the last year of life is a further drain on family finances. The paper concludes with thoughts on whether expecting the family to keep delivering is a sustainable LTC medium term policy in the face of ageing.
    Keywords: Greece; Long term care; Care needs; Austerity; Gender; financial crisis
    Date: 2018–09
  11. By: Justin Falk; Nadia Karamcheva
    Abstract: Federal, state, and local governments continue to consider reducing the cost of their defined benefit pensions by decreasing annuity payments or having employees contribute a larger portion of their salaries toward them, thus reducing those workers’ current pay. Such reductions to compensation can decrease the human capital of a workforce through lower employee retention. Using data that span more than 30 years and reflect substantial policy changes to federal workers’ salary schedules and pension structure, we estimate that the average elasticity of job tenure with respect
    JEL: J26 J33 J45
    Date: 2018–06–21
  12. By: Andras Simonovits (Institute of Economics Centre for Economic and Regional Studies, Hungarian Academy of Sciences also Mathematical Institute of Budapest University of Technology)
    Abstract: We reconsider the problem of indexation of public pensions, emphasizing that similar contribution paths should imply similar benefit paths. This robustness criterion is only satisfied by full wage indexing, which in turn requires the politically unpopular reduction of the accrual rates. To minimize the redistribution from low-earning short-lived citizens to high-earning long-lived ones, progressive benefits should be introduced.
    Keywords: public pensions, indexation, fairness
    JEL: D10 H55
    Date: 2018–08
  13. By: Lucifora, Claudio (Università Cattolica del Sacro Cuore); Vigani, Daria (Università Cattolica del Sacro Cuore)
    Abstract: We investigate the causal impact of retirement on healthcare utilization using SHARE data for 10 European countries. We show that the number of doctor's visits and the probability of visiting a doctor more than four times a year (our measures of healthcare utilization) increase after retirement. The increase in healthcare utilization is found to depend mainly on the years spent in retirement, suggesting that adjustment may take time. We find evidence of heterogeneous effects by gender and across different patterns of time use prior to retirement (i.e., working long hours, and combined work and out-of-work activities). Overall, the empirical findings suggest that the increase in healthcare utilization is consistent with the decrease in the opportunity cost of time faced by individuals when they retire.
    Keywords: retirement, health, healthcare utilization
    JEL: J26 I10 C26
    Date: 2018–08
  14. By: Ben Baumberg Geiger (University of Kent, School of Social Policy, Sociology & Social Research); René Böheim (Department of Economics, Vienna University of Economics and Business); Thomas Leoni (Austrian Institute of Economic Research)
    Abstract: Many countries have reduced the generosity of disability benefits while making them more activating - yet few studies have examined how employment rates have subsequently changed. We present estimates of how the employment rates of older workers with poor health in 13 high-income countries changed between 2004-7 and 2012-15 using HRS/SHARE/ELSA data. We find that those in poor health in the USA have experienced a unique deterioration: they have not only seen a widening gap to the employment rates of those with good health, but their employment rates fell per se. We find only for Sweden (and possibly England) signs that the health employment gap shrank. We then examine possible explanations for the development in the USA: we find no evidence it links to labour market trends, but possible links to the USA´s lack of disability benefit reform - which should be considered alongside the wider challenges of our findings for policymakers.
    Keywords: disability benefits, older workers, poor health, HRS/SHARE/ELSA data
    JEL: H51 I12 I18 J14 J22
    Date: 2018–09
  15. By: Miller, Steven R.; Deller, Steven C.; Stallmann, Judith I.
    Keywords: Community/Rural/Urban Development, Institutional and Behavioral Economics, Teaching/Communication/Extension/Profession
    Date: 2017–06–15

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