nep-age New Economics Papers
on Economics of Ageing
Issue of 2018‒10‒29
eighteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Time Inconsistency and Delayed Retirement Decision: the French Pension Bonus By Steve Briand
  2. Pension Strategies of Workers in a Country Getting Old before Getting Rich By Buchholtz, Sonia; Gaska, Jan; Góra, Marek
  3. Long-term care, ageing and gender in the Greek crisis By Lyberaki, Antigone; Tinios, Platon
  4. Aging Population and Healthcare REITs: A comparative study of Japan and Singapore By Seow Eng Ong; Masanori Kobayashi
  5. Can Education Compensate the Effect of Population Aging On Macroeconomic Performance? By Kotschy, Rainer; Sunde, Uwe
  6. Social Protection Systems in Latin America and the Caribbean: Argentina By Fabián Repetto; Fernanda Potenza Dal Masetto
  7. Pauvreté, Egalité, Mortalité: Mortality (In)Equality in France and the United States By Janet CURRIE; Hannes SCHWANDT; Josselin THUILLIEZ
  8. Social Protection Systems in Latin America and the Caribbean: Ecuador By Mariana Naranjo Bonilla
  9. Understanding Joint Retirement By Pierre-Carl Michaud; Arthur Van Soest; Luc Bissonnette
  10. Alternative methods of estimating the longevity risk By Catalina Bolancé; Montserrat Guillén; Arelly Ornelas
  11. The Effect of Rural Hospital Closure on the Health Status and Access to Care of the Aging Population in five states of the United States By Ona, Lucia Y.
  13. Demand for Annuities: Price Sensitivity, Risk Perceptions, and Knowledge By M. Martin Boyer; Sébastien Box-Couillard; Pierre-Carl Michaud
  14. ¿Hacia una nueva reforma de las pensiones? Notas para el Pacto de Toledo By Ángel de la Fuente; Miguel Ángel García Díaz; Alfonso R. Sánchez
  15. The Impact of China's New Rural Pension Scheme on Family Labor Supply: Does the Beneficiary's Gender Matter? By Lin, Yujie
  16. Adverse Outcome Pathway on chronic binding of antagonist to N-methyl-D-aspartate receptors during brain development leading to neurodegeneration with impairment in learning and memory in aging By Florianne Tschudi-Monnet; Rex FitzGerald
  17. Social Protection Systems in Latin America and the Caribbean: Uruguay By Fernando Filgueira
  18. Population Aging-Impacts and Policy Imperatives_Executive Summary By Economic Research Institute, the Bank of Korea

  1. By: Steve Briand (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon)
    Abstract: With the increase in life expectancy and demographic shocks, several public policies in the last decades aim to encourage individuals to postpone retirement. One of them, the pension bonus, gives an increased pension if individuals retire beyond their Full Retirement Age. Previous ex post analyses found that the responsiveness to this type of financial incentives, which encourage to postpone retirement, is heterogeneous among agents and that the global effect is rather limited. Deriving from previous research in Behavioural Economics, this article analyses the impact of time inconsistency in the decision to delay retirement to get the bonus. Using public national survey data, short-term and long-term impatience are measured with questions on retiring motivations. After controlling for the endogeneity of the bonus knowledge, econometric results show that time-inconsistent agents are less likely to retire with the bonus. JEL codes: C35, J26.
    Keywords: Time inconsistency,Claiming benefits,Pension Bonus
    Date: 2018–10–09
  2. By: Buchholtz, Sonia (Warsaw School of Economics); Gaska, Jan (Warsaw School of Economics); Góra, Marek (Warsaw School of Economics)
    Abstract: The downward trend in replacement rate is going to affect the material wellbeing of Polish future retirees. The aim of this paper is to identify the pension strategies working Poles undertake to counteract future deterioration in material conditions, with particular interest in saving practices and labour market activity. We make use of the Pension awareness of Poles survey data (N=1006) and apply quantitative methods: binary logistic regressions and principal component analysis (PCA). We distinguish between first-best and second-best strategies. The former relates to accumulating pension wealth, while the latter to the range of actions aimed at making ends meet, provided insufficient benefit. The results show that there is a poor relationship between knowledge, plans and behaviour. Moreover, knowledge itself is limited. Even though the awareness of the worsening conditions of retirees-to-be is increasing, little is being done to counteract it. Among various demographic and socio-economic descriptors income and education play an important role in distinguishing patterns, as well as status of self-employed. Three second-best strategies have been distinguished: own responsibility, external support, rebellion. We conclude that information policy on the pension system should be improved, and the incentives for older workers to continue their careers should be strengthened.
    Keywords: pension system, population ageing, supplementary saving, labour force
    JEL: J26 D14 D91
    Date: 2018–09
  3. By: Lyberaki, Antigone; Tinios, Platon
    Abstract: This 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
    JEL: N0
    Date: 2018–09
  4. By: Seow Eng Ong; Masanori Kobayashi
    Abstract: The aging population phenomenon has garnered much attention in recent years, with far reaching implications for the economy, industry and capital markets. This paper focuses on how the aging population affects healthcare REITs in Japan and Singapore by way of a detailed comparative study. Healthcare REITs focus their investments in various medical facilities such as hospitals, medical centers, nursing homes and retirement facilities. Their success is connected to the evolution of the healthcare system and REITs structure. This study focuses on the business model for healthcare REITs, acquisition and distribution implications as well as the stock return performance over time.
    Keywords: acquisition; aging population; Healthcare; Real Estate Investment Trusts; REITs; stock performance
    JEL: R3
    Date: 2018–01–01
  5. By: Kotschy, Rainer (LMU Munich); Sunde, Uwe (LMU Munich)
    Abstract: This paper investigates the consequences of population aging and of changes in the education composition of the population for macroeconomic performance. Estimation results from a theoretically founded empirical framework show that aging as well as the education composition of the population influence economic performance. The estimates and simulations based on population projections and different counterfactual scenarios show that population aging will have a substantial negative consequence for macroeconomic performance in many countries in the years to come. The results also suggest that education expansions tend to offset the negative effects, but that the extent to which they compensate the aging effects differs vastly across countries. The simulations illustrate the heterogeneity in the effects of population aging on economic performance across countries, depending on their current age and education composition. The estimates provide a method to quantify the increase in education that is required to offset the negative consequences of population aging. Counterfactual changes in labor force participation and productivity required to neutralize aging are found to be substantial.
    Keywords: demographic change; demographic structure; distribution of skills; projections; education-aging-elasticity;
    JEL: J11 O47
    Date: 2018–10–17
  6. By: Fabián Repetto (IPC-IG); Fernanda Potenza Dal Masetto (IPC-IG)
    Abstract: "The social protection regime in Argentina has undergone changes over the past two decades. From the early 1990s until the 2001/02 crisis, privatisation of social security and decentralisation of health care and education in favour of provincial governments prevailed, while actions aimed at reducing poverty proliferated and successive (and failed) attempts were made to form a social authority. Finally, starting in 2001, a new regime began to take shape, whose central features included strengthening the role of the State as the driver of decentralised health care and education systems and unifying initiatives aimed at reducing poverty. In addition, the State has regained control of retirement funds and made advances in the progressive universalisation of social security by linking the contributory and non-contributory pillars. However, Argentina has not managed to strengthen social institutionality to promote integration based on measures that would be both relevant and necessary, like those described."(...)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Argentina
    Date: 2018–10
  7. By: Janet CURRIE (FERDI); Hannes SCHWANDT (FERDI); Josselin THUILLIEZ (Centre d'Economie de la Sorbonne - Université de Paris I)
    Abstract: We develop a method to compare levels and trends in inequality in mortality in the United States and France in a similar framework. The comparison shows that while income inequality has increased in both the United States and France, inequality in mortality in France remained remarkably low and stable. In the United States, inequality in mortality increased for older groups (especially women) while it decreased for children and young adults. These patterns highlight the fact that despite the strong cross-sectional relationship between income and health, there is no necessary connection between changes in income inequality and changes in health inequality.
    Date: 2018–05
  8. By: Mariana Naranjo Bonilla (IPC-IG)
    Abstract: "Over the past three decades, the Ecuadorian social protection system has been characterised by universal interventions in the education and health care sectors, along with the implementation of specific social welfare programmes targeted at the poorest populations, such as the Bono de Desarrollo Humano (Human Development Bonus?BDH) and a welfare pension for persons with disabilities. Although Ecuador has managed to expand its social infrastructure and the populations health and education have improved, the redistributional effects of social policies have been limited, especially among rural and marginalised urban populations in the major cities of the country."(...)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Ecuador
    Date: 2018–10
  9. By: Pierre-Carl Michaud; Arthur Van Soest; Luc Bissonnette
    Abstract: Evidence from different sources shows that spouses' retirement decisions are correlated. Retirement policies affecting individuals in couples are therefore also likely to affect behavior of their spouses. It is therefore important to account for joint features in modeling retirement. This paper studies a structural collective model of labor supply and retirement of both partners in a couple with interdependent preferences, imperfect knowledge of preferences of the spouse, and subjective expectations about the future. We propose a novel method to estimate preferences and the intra-household bargaining process, which relies on stated preferences data collected in the Health and Retirement Study. Respondents were asked to choose between hypothetical retirement trajectories describing the retirement ages and replacement rates of both spouses from three perspectives: considering their own preferences only, the preferences of their spouse only, or the most likely decision for the household. With these data, all model parameters are identified and potential sources of joint retirement can be disentangled. We find that males misperceive their wives' preferences, overestimating their disutility of work. Our estimates correct for this bias. They suggest that correlation in unobserved heterogeneity components of the partners' marginal utility of leisure explains a large share of joint retirement decisions. We also find significant positive complementarities in leisure, but this explains a much smaller part of joint retirement.
    Keywords: Collective models, Leisure complementarity, Stated choices, Identification.
    JEL: D13 J26 C81
    Date: 2018
  10. By: Catalina Bolancé (RISKCENTER-IREA, Department of Econometrics, Statistics and Applied Economics, Universitat de Barcelona); Montserrat Guillén (RISKCENTER-IREA, Department of Econometrics, Statistics and Applied Economics, Universitat de Barcelona); Arelly Ornelas (RISKCENTER-IREA, Department of Econometrics, Statistics and Applied Economics, Universitat de Barcelona)
    Abstract: The aim of this paper is to estimate the longevity risk and its trend according to the age of the individual. We focus on individuals over 65. We use the value-at-risk to measure the longevity risk. We have proposed the use of an alternative methodology based on the estimation of the truncated cumulative distribution function and the quantiles. We apply a robust estimation method for fitting parametric distributions. Finally, we compare parametric and nonparametric estimations of longevity risk.
    Keywords: Longevity, value-at-risk, nonparametric inference.
    Date: 2018–10
  11. By: Ona, Lucia Y.
    Keywords: Rural/Community Development, Experimental Economics, Household and Labor Economics
    Date: 2018–06–20
  12. By: Supeecha Panichpathom (Thammasat University); Yongyuth Suphotgamkul (Thammasat University)
    Abstract: In recent years, some real estate developers in Thailand have established elderly condominiums. Previous studies found many important factors affecting elder?s living in senior residence, but this study aimed to investigate elderly opinions about the important factors that influence their living and the performance of senior condominium?s operation. This study collected data by having face-to-face interviews and conducting a questionnaire survey with 73 elders living in ?Sawangkanives?, a senior condominium project operated by Thai Red Cross Society, a medical state agency. The questionnaires were processed and analyzed by performing exploratory factor analysis to extract influenced factors; and then generated the importance-performance analysis (IPA) grid to assess the elder?s living satisfaction in the elderly condominium. Four factors affecting elder?s living are Ambience of Surroundings (AS), Physical Attributes of Room and Common Area (PA), Quality of Staff?s Services (QS) and Social Stimulation (SS). The derived IPA grid showed no factors were in Low Priority quadrant. QS or quality services offered by staff factor was in Concentrate Here quadrant. PA factor and AS factor were in Keep Up the Good Work quadrant. SS factor was in Possible Overkill quadrant. The most worried issue with respect to the services was the rapidly helps that elderly can receive from staff or nurses staying in the condominium. The second issue needed to be addressed was the proper helps the elderly receive from staff or nurses staying in the condominium. The manager of this condominium should not pay any attention to create the activities in order to stimulate the social life or to make them lively. The factors which had high importance and high performance or which manager should maintain good standards were PA factor and AS factor, which implied that this condominium located in proper location, had proper layouts of room and hallway, and also suitable for elderly. In addition to physical attributes, this condominium provided suitability of lighting and entrances and all area in this condominium had good air ventilation for the elderly too.
    Keywords: Residence, Elderly Condominium, Living Satisfaction, Importance-Performance Analysis, IPA
    JEL: D12 L85 M31
    Date: 2018–07
  13. By: M. Martin Boyer; Sébastien Box-Couillard; Pierre-Carl Michaud
    Abstract: The demand for voluntary individual lifetime annuities is low. To assess the reasons why, we designed a stated-preference experiment where we vary characteristics of annuity contracts to estimate individuals’ sensitivity to their value-to-cost ratio, a statistic also known as an annuity’s money’s worth. Using different measures of longevity risk and survival expectations, including individually tailored estimates from a micro-simulation model and subjective expectations, we investigate how knowledge of the product and mortality risk misperceptions affect the take-up as well as the sensitivity of the demand for annuities. We find that annuities are objectively not priced fairly, although they can appear to be fairly priced given an individual’s subjective mortality risk. We also find that demand is somewhat price-inelastic so that, given their current 10% take-up rate, lowering the price of annuities to fair actuarial levels could increase demand by at most 2 percentage points. Lack of knowledge of annuities explains another 1.2 percentage points. We find limited additional interest for deferred annuities compared to immediate ones although respondents are less price sensitive when evaluating deferred annuities.
    Keywords: Life annuities’ money’s worth, Stated preferences, Subjective survival probabilities.
    JEL: J26 D14 I13
    Date: 2018
  14. By: Ángel de la Fuente; Miguel Ángel García Díaz; Alfonso R. Sánchez
    Abstract: En este informe se analizan las posibles consecuencias de la derogación de la reforma de 2013 de la normativa sobre pensiones. Con este fin, se construyen proyecciones de los ingresos y gastos del sistema de pensiones contributivas de la Seguridad Social hasta 2070 con y sin dicha reforma y se exploran sus implicaciones para las cuentas públicas y para el reparto de la renta entre activos y pensionistas bajo dos escenarios alternativos sobre el influjo de inmigrantes en las próximas décadas.
    Date: 2018–08
  15. By: Lin, Yujie
    Keywords: Household and Labor Economics, Rural/Community Development, Behavioral & Institutional Economics
    Date: 2018–06–20
  16. By: Florianne Tschudi-Monnet (University of Lausanne); Rex FitzGerald
    Abstract: This AOP links chronic NMDA receptors inhibition during brain development to neurodegeneration in hippocampus and cortex with amyloid plaque deposition and tau hyperphosphorylation, and impairment of learning and memory, which are considered as hallmark of Alzheimer's disease. It makes use of some KEs and KERs from AOP 13 and introduces Neuroinflammation as KE, which is involved in several neurodegenerative diseases. This AOP is based on the hypothesis of Landrigan and coworkers (2005) proposing an early origin of neurodegenerative diseases in later life. The chemical initiator used in this AOP for the empirical support is lead (Pb). In adults, cumulative lifetime Pb exposure is also associated with decline in cognition, suggesting that long-term exposure during development or occupational exposure increases the risk to develop neurodegenerative disease. The long latency period between exposure and late-onset of effects gives a very broad life-stage applicability. The gap of knowledge is mainly due to limited quantitative evaluations.
    Date: 2018–10–12
  17. By: Fernando Filgueira (IPC-IG)
    Abstract: Uruguays welfare state can be characterised by its universal primary education system, its early and robust social security system as well as widespread health coverage and benefits. Uruguay also has one of Latin Americas highest levels of social spending in terms of Gross Domestic Product (GDP) (24.3 per cent) and as a percentage of total public spending (80.6 per cent)..(?)
    Keywords: Social Protection Systems, Latin America, the Caribbean, Uruguay
    Date: 2018–10
  18. By: Economic Research Institute, the Bank of Korea (Economic Research Institute, The Bank of Korea)
    Abstract: The Republic of Korea is aging rapidly, as the average woman in her childbearing years gives birth to only 1.17 children--among the world's lowest numbers as of 2016--while people are also living longer. The country is projected to enter into the status of an aged society from 2018, with a share of the elderly in its population of 14.3%, and to become a super-aged society with a share of 20% in 2025. Population aging, characterized by low fertility rates and growing life expectancy, influences the whole economy: it alters macroeconomic variables such as output growth, consumption, the current account and inflation as well as household finance, the housing and labor markets, and the industrial structure. It also causes significant changes in the fiscal and monetary policy environment. It is therefore important to assess the impact of aging from a broad, long-term perspective, so as to prepare for it in advance. The Korean government set the low fertility rate and population aging as items on its national agenda back in 2004, and since 2006 has pursued three five-year plans to tackle these issues, albeit without visible results. Given that it takes at least a generation's time to see the effects of a population policy, failing to identify and address the current shortcomings could lead to irreversible consequences later. Against this backdrop, the Bank of Korea has been conducting broad research to analyze the situation related to population aging and devise appropriate policies in response. Under the overarching title Population Aging: Impacts and Policy Imperatives, this volume contains 15 papers, including an assessment of the macro and long-run impacts of population aging, case studies of other countries, and evaluations of and suggestions for the policies as well as the governance framework in Korea. Following this introduction in Part 1, Part 2 provides an overview of how population aging is unfolding in Korea, after which Part 3 undertakes a comprehensive evaluation of the macroeconomic implications of population aging. Part 4 then looks into the impacts of population aging on the various economic sectors, and the related policy challenges. Lastly, Part 5 provides the economic outlook for Korea as population aging progresses, and suggests policy imperatives.
    Keywords: Population Aging
    Date: 2018–10–01

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