nep-age New Economics Papers
on Economics of Ageing
Issue of 2019‒03‒04
nineteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. WELL-BEING DURING THE TRANSITION FROM WORK TO RETIREMENT. By Lieze Sohiers; Luc Van Ootegem; Elsy Verhofstadt
  2. Short-Run Health Consequences of Retirement and Pension Benefits: Evidence from China By Nikolov, Plamen; Adelman, Alan
  3. Impact of later retirement on mortality: Evidence from France By Antoine Bozio; Clémentine Garrouste; Elsa Perdrix
  4. Public Expenditure on Old-Age Income Support in India: Largesse for a Few, Illusory for Most. By Anand, Mukesh Kumar; Chakraborty, Rahul
  5. Employer Concerns and Responses to an Aging Workforce By Robert L. Clark; Steven Nyce; Beth Ritter; John B. Shoven
  6. Anticipation of deteriorating health and information avoidance By Schünemann, Johannes; Strulik, Holger; Trimborn, Timo
  7. Raising the retirement age: the landscape after... By Gorlin, Yury (Горлин, Юрий); Lyashok, Viktor (Ляшок, Виктор)
  8. DETERMINANTS OF INVOLUNTARY EMPLOYMENT IN EUROPE By Lieze Sohiers; Luc Van Ootegem; Elsy Verhofstadt
  9. Consumption- and Productivity-Adjusted Dependency Ratio with Household Structure Heterogeneity By Han, Xuehui; Cheng, Yuan
  10. How Well Can Medicare Records Identify Seniors with Cognitive Impairment Needing Assistance with Financial Management? By David Weir; Kenneth Langa
  11. Household Responses to Transfers and Liquidity: Evidence from Social Security’s Survivors Benefits By Itzik Fadlon; Shanthi P. Ramnath; Patricia K. Tong
  12. Addressing Social Security’s Solvency While Promoting High Labor Force Participation By John Laitner
  13. Local Economic Hardship and Its Role in Life Expectancy Trends By John Bound; Arline T. Geronimus; Timothy A. Waidmann; Javier M. Rodriguez
  14. The middle class in Japan, 1994-2009: Trends and characteristics By Soichiro Tanaka; Masato Shikata
  15. Relative Sizes of Age Cohorts and Labor Force Participation of Older Workers By David Neumark; Maysen Yen
  16. Addition to the RAND HRS Longitudinal Files: IRA Withdrawals in the HRS, 2000 to 2014 By Michael D. Hurd; Erik Meijer; Philip Pantoja; Susann Rohwedder
  17. "If You Were Me": Proxy Respondents' Biases in Population Health Surveys By Bérengère Davin; Xavier Joutard; Alain Paraponaris
  18. Can Policy Change Culture? Government Pension Plans and Traditional Kinship Practices By Bau, Natalie
  19. Population Aging and the Possibility of a Middle-Income Trap in Asia By Ha, Joonkyung; Lee , Sang-Hyop

  1. By: Lieze Sohiers; Luc Van Ootegem; Elsy Verhofstadt (-)
    Abstract: We investigate the consequences of retirement from work for the overall well-being of individuals aged 50 and above. The overall well-being is approximated by two indicators: the life satisfaction indicator which is a cognitive reflection of the satisfaction with life and a multidimensional indicator about Control, Autonomy and Self-realizations (CAS). The latter indicator is related to the capabilities concept (specifically agency-freedom) of Sen (1985, 1999). It evaluates overall well-being by the level of agency or the ability of people to pursue the things they want to do and be the humans they want to be. Using the longitudinal Survey of Health, Ageing and Retirement in Europe (SHARE), we find that employed and recently retired respondents have no different level of life satisfaction. Older workers do report a higher level of agency-freedom when they retire. This paper additionally investigates several forms of heterogeneities in the transition from work to retirement. We consider partial, early and joint retirement, part-time and self-employment, and job quality. We also investigate whether the extra leisure time of retired respondents affects well-being. We find that there is no difference in overall well-being between being partially and fully retired, between being retired before or after the normal retirement age or between those who retire simultaneously with their partner and those who don’t. However, for some older workers, such as those employed with a low quality job, retirement can be a relief from their current employment status. Retired respondents have more care duties which affects their well-being negatively. Charity work and sport activities affect well-being positively.
    Keywords: retirement; life satisfaction; agency; CASP; aging; well-being
    Date: 2019–02
  2. By: Nikolov, Plamen; Adelman, Alan
    Abstract: This paper examines the impact of the New Rural Pension Scheme (NRPS) in China. Exploiting the staggered implementation of an NRPS policy expansion that began in 2009, we used a difference-in-difference approach to study the effects of the introduction of pension benefits on the health status, health behaviors, and healthcare utilization of rural Chinese adults age 60 and above. The results point to three main conclusions. First, in addition to improvements in self-reported health, older adults with access to the pension program experienced significant improvements in several important measures of health, including mobility, self-care, usual activities, and vision. Second, regarding the functional domains of mobility and self-care, we found that the females in the study group led in improvements over their male counterparts. Third, in our search for the mechanisms that drive positive retirement program results, we find evidence that changes in individual health behaviors, such as a reduction in drinking and smoking, and improved sleep habits, play an important role. Our findings point to the potential benefits of retirement programs resulting from social spillover effects. In addition, these programs may lessen the morbidity burden among the retired population.
    Keywords: life-cycle,retirement,pension,health,aging,developing countries,China
    JEL: H55 H75 I10 I12 I19 J26
    Date: 2019
  3. By: Antoine Bozio (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, IPP - Institut des politiques publiques - PSE - Paris School of Economics); Clémentine Garrouste (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine, Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris-Dauphine); Elsa Perdrix (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)
    Abstract: This paper investigates the impact of delaying retirement on mortality among the French population. We take advantage of the 1993 pension reform in the private sector to identify the causal effect of an increase in claiming age on mortality. We use administrative data which provide detailed information on career characteristics, dates of birth and death. Our results, precisely estimated, show that an exogenous increase of the claiming age has no significant impact on the probability to die between age 65 and 72, conversely we find that an increase of the retirement age of one year leads to an increase of 0.004 in the death rate between age 72 and 77. This effect is qualitatively small, and we discuss more generally the ability to estimate small effects in rare event data using minimal detectable effect procedure.
    Keywords: pension reform,health,mortality
    Date: 2019–02
  4. By: Anand, Mukesh Kumar (National Institute of Public Finance and Policy); Chakraborty, Rahul (National Institute of Public Finance and Policy)
    Abstract: Policy enunciation often remains hostage to a program-centric approach for plan-ning and reform in developing countries. Old-age income support in India faces such a policy predicament. Extant studies deciphering related public expenditure thus carry lim-itations on (a) system expanse, (b) corresponding data collation, and therefore (c) depth of resource conscription. Benchmarking to the five-pillar architecture advanced by World Bank for old-age income support system, this paper traces (a) public expenditure, (b) av-erage benefits, (c) workers included, and (d) elderly covered, under each pillar in India. The constituents for respective pillars in India are heuristically identified and data on expenditure by federal and sub-national governments are collated or estimated using government finance accounts and annual reports. Workers and elderly covered under each pillar are estimated using data drawn from diverse sources on identifiable groups. The study finds that, the extant system in India presents a larger and rising burden on sub-national governments, with implications for macroeconomic balance. In 2013-4 the elderly comprised 8.6 percent of the population and old-age income support system entailed 11.5 percent of public expenditure of combined federal and sub-national govern-ments. Less than two percent of it constituted co-contributions in the nature of capital expenditure. Only 43 percent of 118.36 million elderly drew benefit from public expendi-ture and more than 85 percent workers remain excluded from the system. Including those drawing social pension, 70 percent of all beneficiaries collect less than the rural poverty line drawn at INR 11016 per annum. The paper suggests (a) capping defined-benefit for exceptionally privileged, (b) re-form of regulatory paradigm to harmonize contributory schemes, dissolve exclusive (sec-tion, sector, or region-based) approach and adopt inclusive principle to widen coverage, (c) unrequited sustained contribution by government for low-income earners and under-privileged, and (d) assimilation of information technology enablers for effective and effi-cient targeting of social pension. Pension policy reform anywhere, often faces arduous implementation, and extant processes in India merely tinker with inception of an essentially long gestation procedure.
    Keywords: Pension in Developing Countries ; Public Expenditure ; Social Security System in India
    JEL: H55 J14
    Date: 2019–02
  5. By: Robert L. Clark; Steven Nyce; Beth Ritter; John B. Shoven
    Abstract: Economist and public policy analysts have devoted considerable research to examining the work and retirement decisions of employees. Much less effort has been spent on understanding the concerns and challenges of employers if their workers delay retirement and remain on the job until older ages. In this study, we report findings from three employer surveys with the objective of learning how organizations are responding to the aging of their workforces. The surveys provide several important observations. First, employer concerns about workforce aging vary considerably across the economy. To some firms, these demographic changes are of immediate concern and are viewed as a significant risk to the organization while other firms remain more concerned about potential productivity and cost effect of an older labor force. Second, most employers expect the importance of workforce aging to increase in the next five years. In response, a significant proportion of organizations are making changes to working conditions and compensation policies. Third, firms remain reluctant to adopt formal phased retirement policies but are more willing to offer part-time employment, return to work, and other policies on a case by case basis.
    JEL: J1 J2 J23 J26
    Date: 2019–02
  6. By: Schünemann, Johannes; Strulik, Holger; Trimborn, Timo
    Abstract: The anticipation of bad future events reduces currently experienced happiness and it may through this channel elicit detrimental behavioral responses. We explore this idea in the context of endogenous health and aging. We integrate physiological aging into a life-cycle model, calibrate it with data from gerontology, and analyze how the anticipation of a deteriorating state of health affects health spending, life expectancy, and the value of life. In counterfactual computational experiments we compare behavior and outcomes of anticipating and non-anticipating individuals and find that anticipation decreases lifetime utility, health investments, and longevity. We then use the model to contribute to the literature on information avoidance. We find that anticipation provides a strong motive to avoid medical testing even when the likelihood of developing a certain disease is high and the cost for the test is low.
    Keywords: Health,Anticipation,Longevity,Health Behavior,Value of Life,Information Avoidance
    JEL: D11 D91 I12 J17
    Date: 2019
  7. By: Gorlin, Yury (Горлин, Юрий) (The Russian Presidential Academy of National Economy and Public Administration); Lyashok, Viktor (Ляшок, Виктор) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The changes in the pension legislation adopted in November 2018, related to raising the retirement age, determine one of the most significant and responsible decisions in the socio-economic sphere that have been taken in recent decades. This decision will affect to a greater or lesser extent the majority of Russians, will affect the country's economy and will be a challenge for almost all social institutions. This report presents an analysis of the consequences of the implementation of legislation adopted in connection with raising the retirement age for the mandatory pension insurance system, the labor market, and the level of poverty. The report formulates proposals for making adjustments to the pension system in connection with raising the retirement age and possible measures to prevent the associated risks.
    Date: 2019–01
  8. By: Lieze Sohiers; Luc Van Ootegem; Elsy Verhofstadt (-)
    Abstract: The worker’s perception of a forced decision to work (i.e. involuntary employment) has a negative effect on the overall well-being of the older worker (aged 50 and above). This paper first investigates the job situation, the financial and health situation and the relationship status of the involuntary workers. The micro data of the Survey of Health, Ageing and Retirement in Europe (SHARE) allows for panel estimations. We control for unobserved differences in personality traits between voluntary and involuntary workers. We find that the job situation of the worker and the retirement of the partner are important drivers of involuntary employment. Specifically, involuntary workers are more frequently employed in jobs that are physically demanding or that have more stress related tasks. Involuntary workers also often feel underappreciated for their work by the management or colleagues. Second, we focus on cross-country differences. The fraction of involuntary workers in the labor population aged 50 and more ranges from 29 percent in Switzerland to 62 percent in Spain. We find that in the countries with the lowest rates of involuntary employment, the involuntary workers have better working conditions and are more easily able to make ends meet. Furthermore, the country dummies in our estimations indicate that the probability of being involuntarily employed is partly explained by time-invariant factors that differ across countries, for example public policies, e.g. pension systems. We investigate cross-country differences in four aspects of the pension system. The countries with the lowest rates of involuntary employment are those with the highest rates of partial and joint retirement.
    Keywords: older workers; involuntary employment longer working careers; aging
    JEL: J26 J28
    Date: 2019–02
  9. By: Han, Xuehui (Asian Development Bank); Cheng, Yuan (Fudan University)
    Abstract: In this study, we construct a new dependency ratio measure by taking into account the consumption needs of the young and elderly people, and the productivity of middle-aged people. Different from the way that Cutler et al. (1990) and Weil (1999) constructed the relative needs by using the average consumptions of each age cohort of people, we estimate the factor of relative needs of people at different ages based on a regression model, which embraces the household age compositions and size in the assessment. Our analysis uses household survey data from five developing countries in Asia— Bangladesh, Cambodia, the People’s Republic of China (PRC), Thailand, and Viet Nam. To our best knowledge, this is among the pioneer work exploring such patterns for these countries. Focusing on the PRC, we further examine whether consumptions depend on the coresidence style. We found that (i) the consumption- and productivity-adjusted dependency ratio (both total and old dependency ratios) are consistently lower than the one that is traditionally defined across all five countries in our sample, and the differences vary from country to country; (ii) in the PRC, the differences between traditional dependency ratio and the consumption- and productivity-adjusted dependency ratio grow larger in more distant future; and (iii) in the PRC, the relatively younger elderly members between 65 and 72 years old help in reducing the consumption of young members in their households, and the elderly members who live alone consume more than their peers who live with their offspring. We also simulate the impacts of smaller households, urbanization, and economic growth on consumption for the PRC, based on our model.
    Keywords: consumption- and productivity-adjusted dependency ratio; coresidence; household structure
    JEL: D10 E10 E21 H55 J11
    Date: 2017–12–18
  10. By: David Weir (University of Michigan); Kenneth Langa (University of Michigan)
    Abstract: Aging countries should have an interest in policies to assist older beneficiaries in managing finances when there is a need. This project investigated the value of Medicare records as a guide to identifying persons with cognitive impairment in need of assistance with financial management. It used data from the Health and Retirement Study (HRS) on persons 65 and older, who consented to linkage to Medicare records at a rate of approximately 90 percent. Sampling weights were adjusted to account for linkage rates. The HRS survey data provided direct evidence on cognitive impairment and difficulty managing finances. The Medicare records are an imperfect guide to cognitive impairment as a medical diagnosis. About 40 percent of persons with impairment consistent with dementia are not identified in Medicare, and about 40 percent of persons with a diagnosis in Medicare records do not have impairment that severe. The records are even worse as a guide to who perceives or is perceived by others as needing assistance with financial management. Outside of institutional settings, Medicare records identify fewer than half the people needing assistance with financial management, and point to a substantial number of people who say they do not. The use of Medicare records alone to identify older beneficiaries in need of assistance with financial management would lead to substantial errors in coverage.
    Date: 2018–10
  11. By: Itzik Fadlon; Shanthi P. Ramnath; Patricia K. Tong
    Abstract: We use administrative tax data that cover the U.S. population to identify the causal effects of Social Security’s survivors benefit receipt on American families’ behavior and financial well-being. We analyze over a quarter of a million widowed households in which the husband died between 2002-2007, and we exploit a sharp age discontinuity in benefit eligibility to study the responses of financially vulnerable households to government transfers. We first study how households respond to unanticipated benefit receipt in the immediate periods following a large financial shock to investigate the protective role of transfers. We find significant impacts of the program on newly-widowed families’ net income and labor supply behavior, which points to considerable allocative inefficiencies in the life insurance market and to a high valuation of survivors benefits in protecting Americans against mortality shocks. Second, to investigate the particular role of liquidity and benefit timing, we then study how already-widowed women’s labor supply responds to anticipated survivors benefit receipt. We find considerable responses to cash-on-hand via benefit availability that underscore allocative inefficiencies in the credit market and the value of liquidity itself provided by government transfers. These responses and their heterogeneity highlight mechanisms that underlie the labor supply behavior of older vulnerable households, and they point to liquidity constraints, rather than myopia or benefit-schedule misperceptions, as the likely operative channel. Our results have implications for survivors benefits in the U.S., and, more generally, for retirement behavior and response mechanisms to transfers among older vulnerable populations.
    JEL: D1 D61 G22 H0 H55 I1 I38 J2
    Date: 2019–02
  12. By: John Laitner (University of Michigan)
    Abstract: A number of proposals and options to address OASI trust-fund solvency have been suggested in recent years. The present work attempts to examine solvency-promoting reforms from the standpoint of economic efficiency — that is, from the perspective of their effect on household and societal well-being. Ultimately, we argue that solvency and efficiency should be joint considerations for policy. We first set up a structural model of household consumption/saving and retirement choices. We estimate the model’s parameters using Consumer Expenditure Survey and Health and Retirement Study data. Then we simulate policy changes. Using the 2017 Social Security Trustee’s Report, we examine policy changes that could prevent trust fund depletion for 75 years or more. In the simulations, payroll tax increases or Social Security benefit reductions sufficient to ensure solvency have modest effects on household labor supply, though they lower lifetime consumption and utility. Earlier work considered age-targeted payroll tax changes that could promote longer careers. Here, we examine possible changes to the Social Security benefit formula — specifically the AIME formula — that could encourage delayed retirement more straightforwardly. We show that incentivizing an extra one to two years of work on average might be possible. That would generate substantial new tax revenues, from both payroll and income taxes. Although sacrificed leisure would lead to household utility reductions, they are relatively small — comparable to the best alternatives. Comparing the results with simpler tax and benefit changes, we suggest that promoting longer careers could enlarge the set of policy options in a useful way.
    Date: 2018–10
  13. By: John Bound (University of Michigan); Arline T. Geronimus (University of Michigan); Timothy A. Waidmann (Urban Institute); Javier M. Rodriguez (Claremount Graduate University)
    Abstract: Recent research has found, in some groups of Americans, dramatic increases in deaths due to drug overdose and suicide and an overall stagnation of trends toward increased longevity. This study examines the link between mortality of older working age (45 to 64) adults and local economic downturns in the U.S. to evaluate the role of economic shifts in various causes of death and their related mortality trends. Specifically, we estimate regression models to test the hypotheses that the longevity effects of poor economic prospects are reflected through (1) increased suicide, drug overdose, and other “deaths of despair” and (2) other causes of death linked to exposure to economic and social stress such as heart and cerebrovascular disease. To avoid the problem of endogeneity of local economic conditions to mortality conditions, we measure the local economic shock of lost employment with predicted employment based on baseline industrial composition and national trends in employment by industry. We find evidence consistent with prior research that among non-Hispanic white adults, midlife mortality has increased since 1990, particularly among those with low educational attainment. We also find that “deaths of despair” are important contributors to that trend. However, we find that while distress in local, area economies does predict increased mortality for chronic disease, it predicts decreased mortality from suicides, opioids, and other substance abuse. This finding suggests caution in the application of the construct of despair in explaining recent mortality patterns.
    Date: 2018–10
  14. By: Soichiro Tanaka (Department of Economics, Kanto Gakuin University); Masato Shikata (School of policy studies, Kwansei Gakuin University)
    Abstract: In this study, we estimate the population shares of the Japanese middle class during 1994-2009 and discuss its characteristics. The middle class hovered around 65% (from 67.29% in 1994 to 65.21% in 2009) of the population, having 75-200% of each year's median income. However, if we fix the income ranges of the middle class to the 1994 level, the middle class declined considerably to 59.47% in 2009, the upper class also declined, and the lower class and the poor increased. Thus, the stability of the middle class seems due to the overall decline in Japan's income distribution. In addition, the population share of the middle class among the working population (18-64 years) is larger than that among the elderly population (65 years and over). Therefore, the middle class is in danger of shrinking further as the population continues ageing. Meanwhile, population ageing also affects redistributive policies: the share of social transfers of gross income is increasing and the redistributive effect of social security is growing. Additionally, despite declining income levels, there were no major changes in the share of income tax (including social insurance premiums) on gross income. This is, in fact, assumed to be due to factors such as increased social insurance rates.
    Keywords: Middle class, Income inequality, Poverty rate
    JEL: D31 H24 I32
    Date: 2019–01–07
  15. By: David Neumark (University of California-Irvine, NBER, and IZA); Maysen Yen (University of California-Irvine)
    Abstract: We study the effects of the size of older cohorts on labor force participation (LFP) and wages of older workers. In the standard relative supply framework usually applied to relative cohort size, we would expect larger older cohorts to experience lower wages and hence lower employment or LFP. However, there are two reasons that we might find a positive effect. First, we might expect the age structure of the population to affect the composition of consumption and hence labor demand; it is possible that the age structure of employment is such that relative labor demand for an age cohort increases when the relative size of that cohort increases. Second, a large older cohort implies that the old cohort is large relative to at least some other narrowly-defined age cohorts. If two age cohorts are substitutable, then a decline in the relative size of one of them can imply an increase in the relative demand for the other. We use panel data on states, treating the age structure of the population as endogenous, owing to migration. We find that when older cohorts are large relative to a young cohort, the evidence fits the relative supply hypothesis. But when older cohorts are large relative to 25-49 year-olds, the evidence points to a relative demand shift. Thus, we need a more nuanced view than simply whether the older cohort is large relative to the population; the cohort they are large relative to matters.
    Date: 2018–09
  16. By: Michael D. Hurd (RAND); Erik Meijer (RAND and University of Southern California); Philip Pantoja (RAND); Susann Rohwedder (RAND)
    Abstract: In support of research on the older population, we produced cleaned variables based on data from the Health and Retirement Study (HRS) to capture information on withdrawals from individual retirement accounts (IRAs). Where necessary, imputations for missing values have been performed using methods consistent with those employed in the RAND HRS. To facilitate analyses of retirement resources, we also included approximations of annualized IRA withdrawal amounts. The cleaning and derivation of the new variables has been fully integrated into the RAND HRS production process so that maintenance and the addition of future waves can be achieved with relatively small effort. Construction of the new variables for HRS waves 2000 to 2014 has been completed; the corresponding variables for HRS 2016 are currently being processed along with the entire HRS 2016 core data. The full set of new IRA withdrawal variables (HRS waves 2000 to 2016) will be made available to the research community with the next release of the RAND HRS Longitudinal File, including detailed documentation as part of the accompanying codebook. Based on these new variables, we found that about 16 percent of HRS households withdrew money from their IRA accounts since the last interview, and conditional on making a withdrawal, the average total withdrawal amount is about $23,000 in the later HRS waves.
    Date: 2018–10
  17. By: Bérengère Davin (SESSTIM - U912 INSERM - Aix Marseille Univ - IRD - Sciences Economiques et Sociales de la Santé & Traitement de l'Information Médicale - IRD - Institut de Recherche pour le Développement - INSERM - Institut National de la Santé et de la Recherche Médicale - AMU - Aix Marseille Université, ORS PACA - Observatoire régional de la santé Provence-Alpes-Côte d'Azur [Marseille]); Xavier Joutard (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire Français des Conjonctures économiques - Institut d'Études Politiques [IEP] - Paris - Fondation Nationale des Sciences Politiques [FNSP]); Alain Paraponaris (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, ORS PACA - Observatoire régional de la santé Provence-Alpes-Côte d'Azur [Marseille])
    Abstract: Proxy respondents are widely used in population health surveys to maximize response rates. When surveys target frail elderly, the measurement error is expected to be smaller than selection or participation biases. However, in the literature on elderly needs for care, proxy use is most often considered with a dummy variable in which endogeneity with subjects' health status is rarely scrutinised in a robust way. Pitfalls of this choice extend beyond methodological issues. Indeed, the mismeasurement of needs for care with daily activities might lead to irrelevant social policies or to private initiatives that try to address those needs. This paper proposes a comprehensive and tractable strategy supported by various robustness checks to cope with the suspected endogeneity of proxy use to the unobserved health status of subjects in reports of needs for care with activities of daily living. Proxy respondents' subjectivity is found to inflate the needs of the elderly who are replaced or assisted in answering the questionnaire and to deflate the probability of unmet or undermet needs.
    Keywords: needs for care,Copula,selection,proxy respondent,measurement bias,endogeneity,ADLs,IADLs
    Date: 2019–02–20
  18. By: Bau, Natalie
    Abstract: Policies may change the incentives that allow cultural practices to persist. To test this, I study matrilocality and patrilocality, kinship traditions that determine daughters' and sons' post-marriage residences and thus, which gender lives with and supports parents in their old age. Two separate policy experiments in Ghana and Indonesia show that pension policies reduce the practice of these traditions. I also show that these traditions incentivize parents to invest in the education of children who traditionally co-reside with them. Consequently, when pension plans change cultural practices, they also reduce educational investment. This finding further demonstrates that policy can change culture.
    Keywords: Cultural change; cultural transmission; kinship traditions
    Date: 2019–01
  19. By: Ha, Joonkyung (Hanyang University); Lee , Sang-Hyop (University of Hawaii at Manoa)
    Abstract: We present three conditions for a demography-driven middle-income trap and show that many economies in East, South, and Southeast Asia satisfy all of them. The conditions are (1) support ratio— the ratio of workers to consumers—matters for economic growth, (2) economic development accompanies more investment in human capital and lower fertility due to the quantity–quality tradeoff, and (3) current low level of fertility corresponds to too low support ratios for keeping up with the frontier economies in the long run. The panel analyses for 178 countries, among which 30 are ADB developing member economies, show that (i) and (ii) are satisfied for Asia with higher elasticity than others. As for (iii), we set up a dynamic model for simulations, showing that about two-thirds of ADB members have unsustainable level of support ratios, implying possibilities of a middle-income trap due to demographic headwinds in the future.
    Keywords: demography; fertility; middle-income trap; national transfer accounts; support ratio
    JEL: J11 O11 O53
    Date: 2018–02–16

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