nep-age New Economics Papers
on Economics of Ageing
Issue of 2019‒02‒18
thirteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. On the Political Feasibility of Increasing the Legal Retirement Age By Benjamin Bittschi; Berthold U. Wigger
  2. Assessing Pension Expenditure Determinants – the Case of Portugal By Maria Teresa Medeiros Garcia; André Fernando Rodrigues Rocha da Silva
  4. The introduction of a social gradient in mortality in the Destinie 2 model By A. CAZENAVE-LACROUTZ; F. GODET; V. LIN
  5. Employment Pattern after Retirement and its Evaluation - An empirical analysis of the continued employment system (Japanese) By KUME Koichi; TSURU Kotaro; SANO Shinpei; YASUI Kengo
  6. Can Pension Funds Partially Manage Longevity Risk by Investing in a Longevity Megafund? By Edouard Debonneuil; Anne Eyraud-Loisel; Frédéric Planchet
  7. Fertility, Inequality and Income Growth By Masaya Shintani; Masaya Yasuoka
  8. Understanding the Correlation between Alzheimer’s Disease Polygenic Risk, Wealth, and the Composition of Wealth Holdings By Su H. Shin; Dean R. Lillard; Jay Bhattacharya
  9. The coming super-aged death-ridden society (Japanese) By FUJI Kazuhiko
  10. Are Disappearing Employer Pensions Contributing to Rising Wealth Inequality? /John Sabelhaus and Alice Henriques Volz. By John Sabelhaus; Alice M. Henriques
  11. Policy Options for Older Adults Experiencing the Onset of Work-Limiting Medical Conditions By Jody Schimmel; David Stapleton
  12. Mental Disorders Among Non-Elderly Nursing Home Residents By Samuel E. Simon; Debra J. Lipson; Christal M. Stone
  13. Which States Have Limited Medicaid Managed Care Enrollment for Long-Term Care Users? By Valerie Cheh

  1. By: Benjamin Bittschi; Berthold U. Wigger
    Abstract: Within a politico-economic model we first establish three hypotheses: (i) Retirees generally prefer a higher retirement age than workers, whereby just retired individuals prefer the highest retirement age, (ii) in equilibrium the level of the legal retirement age is increasing in longevity and (iii) decreasing in the public pension replacement rate. We then test these hypotheses empirically. Employing micro data for Germany we corroborate the first hypothesis with descriptive regressions and a fuzzy regression discontinuity (FRD) design. We show that just retired individuals are indeed most in favor of an increase in the legal retirement age. On the basis of cross country panel IV regressions we provide evidence for the second and third hypothesis. We demonstrate that a one percentage point increase in the share of the elderly increases the legal retirement age by 0.3 to 0.5 years, and that a 10 percentage point increase in the replacement rate reduces the legal retirement age by 0.5 to 3 years. We conclude that if policy contains the generosity of public pensions, increasing the legal retirement age becomes politically more feasible.
    Keywords: retirement age, pension reform, longevity, replacement rate
    JEL: D72 H55 J26
    Date: 2019
  2. By: Maria Teresa Medeiros Garcia; André Fernando Rodrigues Rocha da Silva
    Abstract: Pension expenditure is a concern for the sustainability of public finances in the European Union. Therefore, assessing pension expenditure determinants is crucial. This study aims to disentangle the impact of demographic and economic variables, such as ageing, productivity, and unemployment, on pension expenditure. Using Portuguese time-series data, from 1975 to 2014, statistical evidence was found of co-integration between unemployed people aged between 15 and 64 years old, apparent productivity of labour, the old-age dependence index and pension expenditure as a share of gross domestic product. The use of a vector error correction model, with impulse-response functions and variance decomposition, showed that ageing has an almost insignificant impact in the long-run, when compared with unemployment and productivity.
    Keywords: pension expenditure, determinants, linear regression analysis
    JEL: C32 C51 C52 H55
    Date: 2019–02
  3. 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.
    Date: 2018–06–11
  4. By: A. CAZENAVE-LACROUTZ (Insee); F. GODET (Insee); V. LIN (Insee)
    Abstract: We use here the mortality tables by education level recently published by Blanpain (2016b) to significantly improve the projected differential mortality in the Destinie 2 model that was usually only based on Insee mortality projections broken down by age and sex categories. We show that the relational proportionality method better predicts the evolution of differential mortality over the recent past than the Brass relationality method, used in other microsimulation models. The introduction of heterogeneous mortality according to education level aims at better reproducing the positive correlation that exists beteen life expectancy and pension levels. To quantify it, we compare the elasticities of survival to the amount of the retirement pension, by sex and age, obtained by microsimulation with those estimated on the Échantillon Interrégimes de Retraités (EIR). The simulated elasticities are lower than the empirical elasticities, especially for women. For men, however, they are statistically significant and at least two-thirds of the empirically observed values. At the aggregate level, this introduction also slightly increases projected pension expenditure.
    Keywords: Microsimulation, differential mortality, pension
    JEL: C63 C88 H55 J11 J26
    Date: 2018
  5. By: KUME Koichi; TSURU Kotaro; SANO Shinpei; YASUI Kengo
    Abstract: In this paper, we analyzed micro data on retirement and reemployment, provided by RIETI, and we evaluated the continued employment system after initial retirement from the standpoint of elderly employees. According to our results, those who chose the continued employment system have job change experiences when they were young. In addition, continuing employees are forced to accept lower levels of job satisfaction, a wide range of wage cuts, and deterioration of treatment in exchange for employment stability. The motivation of continuing employees to work after age 65 is also significantly lower than for other workers. Among continuing employees, wages per hour and job satisfaction levels were high in professionals, and job satisfaction of continuing employees who work as advisors was relatively high. On the other hand, continuing employees are reluctant to change their jobs, wage profiles, or mandatory retirement age. For the future elderly employment system, it is necessary for continuing employees to accumulate specialized skills and make use of them until they retire, by entering new professionals or acting as mentors to young workers. Also, considering the low job satisfaction and the low willingness to work after age 65 among continuing employees, it is unclear whether the policy of raising the legal age of continued employment over age 65 will improve the elderly employment rate. This paper suggests that it is important for companies to provide different working styles to allow for the employment of continuing workers, whose individual capabilities and other characteristics must be taken into account.
    Date: 2019–01
  6. By: Edouard Debonneuil (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Anne Eyraud-Loisel (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Frédéric Planchet (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon)
    Abstract: Pension funds that handle retirement risk need to invest assets in a diversified manner, on long durations and if possible while facing interest rate and longevity risk. In the recent years, a new class of investment called a longevity megafund was described, that invests in clinical trials for solutions against age-related diseases. Using simple models, we here study the financial interest for pension funds of investing in a longevity megafund.
    Date: 2018
  7. By: Masaya Shintani (Graduate School of Economics, Kobe University); Masaya Yasuoka (School of Economics, Kwansei Gakuin University)
    Abstract: This paper sets an endogenous fertility model with a two-sector model: one for the final goods sector and the other for child care service sector. Results of theoretical analysis indicate that the subsidy for children raises the labor share of the child care service sector and that it can increase fertility. An aging population reduces fertility and the labor share of the child care service sector. In addition to these results, we consider monetary policy effects on fertility. Results show that monetary policy can raise fertility and the labor share of the child care service sector by virtue of an increase in the pension benefit if a pay-as-you-go pension exists.
    Keywords: Aging Population, Fertility, Income Growth, Monetary Policy, Subsidy
    JEL: J11 J14 E31 H22
    Date: 2019–02
  8. By: Su H. Shin; Dean R. Lillard; Jay Bhattacharya
    Abstract: We investigate how the genetic risk of developing Alzheimer's Disease (AD) relates to saving behavior. Using nationally representative data from the 1992-2014 Health and Retirement Study (HRS), we find that genetic predisposition for AD correlates with, but is not causally related to older individuals’ wealth holdings. People with higher Alzheimer’s Disease polygenic risk score (PGS) hold roughly 9 percent more wealth in CDs (hands-off assets) and around 11 percent, 15 percent, and 7 percent less wealth in stocks, IRAs, and other financial assets (hands-on assets) respectively. We explore three hypotheses that could explain these correlations. We hypothesize that people with high risk of AD choose different portfolios because: (i) they know their polygenic risk of developing Alzheimer’s Disease and related dementia, (ii) they have lower cognitive capacity, and (iii) the genome-wide association studies (GWAS) process that generated the Alzheimer’s Disease PGS failed to fully account for the aging process. Our extended model results do not support the first two hypotheses. Consistent with the third hypothesis, the interaction between age and the Alzheimer’s Disease PGS explains the correlation between genetic traits and asset holdings.
    JEL: D1 D8 I12
    Date: 2019–02
  9. By: FUJI Kazuhiko
    Abstract: In Japan, more than 1.5 million people will be dying every year in the near future. Since World War II, more people have died in the hospital than at home. But in the future this ratio will reverse. Additionally, the main providers of end of life care are likely to shift from family members to friends. There are signs thatthe Value of old age and death is changing from negative to positive. The coming of the age of AI (artificial Intelligence) has the potential to increase the value of death, because being aware of death is a source of human creativity. The credit of currncy is originally derived from religious beliefs. By taking advantage of the block chain technology we can construct networks for end of life care. In order to turn the crisis of the coming super-aged death-ridden society into an opportunity we should build our society based on these new values.
    Date: 2018–12
  10. By: John Sabelhaus; Alice M. Henriques
    Abstract: Focusing our attention on families close to retirement, we consider the interplay between employer-sponsored retirement wealth and Social Security.
    Date: 2019–02–01
  11. By: Jody Schimmel; David Stapleton
    Keywords: Older Adults, Medical Conditions , Disability
    JEL: I J
  12. By: Samuel E. Simon; Debra J. Lipson; Christal M. Stone
    Abstract: Despite federal nursing home policies designed to prevent inappropriate institutionalization, many Medicaid beneficiaries under age 65 with serious mental illness may be inappropriately admitted to nursing facilities.
    Keywords: Mental Disorders , Nursing Home Residents , antipsychotic, claims data, IMD Medicaid, Mental Illness, Olmstead
    JEL: I J
  13. By: Valerie Cheh
    Abstract: The MAX Medicaid policy issue brief series highlights the essential role MAX data can play in analyzing the Medicaid program.
    Keywords: MAX , Medicaid , Medicaid Managed Care , Long-Term Care , Health
    JEL: I

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