nep-age New Economics Papers
on Economics of Ageing
Issue of 2019‒03‒11
eight papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Short-Run Health Consequences of Retirement and Pension Benefits: Evidence from China By Nikolov, Plamen; Adelman, Alan
  2. Demographics and the Natural Rate of Interest in Japan By Fei Han
  3. The Silver Innovation. Older workers characteristics and digitalisation of the economy By Pietro Checcucci
  4. Measuring Multivariate Risk Preferences in the Health Domain By Arthur Attema; Olivier L’haridon; Gijs Van de Kuilen
  5. Optimal Progressivity with Age-Dependent Taxation By Heathcote, Jonathan; Storesletten, Kjetil; Violante, Giovanni L.
  6. The Relationship between Age and Subjective Well-Being: Estimating Within and Between Effects Simultaneously By Philipp Biermann; Juergen Bitzer; Erkan Goeren
  7. Political Parties Do Matter in U.S. Cities ... For Their Unfunded Pensions By Christian Dippel
  8. Education Debt Owed by Older Families in the 2016 Survey of Consumer Finances By Jesse Bricker; Alice M. Henriques; Elizabeth Llanes

  1. 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. (JEL H55, H75, I10, I12, I19, J26)
    Keywords: life-cycle, retirement, pension, health, aging, developing countries, China.
    JEL: H55 H75 I10 I12 I15 I19 J26 J32 O11
    Date: 2018–11–30
  2. By: Fei Han
    Abstract: Japan’s aging and shrinking population could lower the natural rate of interest and, together with low inflation expectations, challenge the Bank of Japan’s efforts to reflate the economy. This paper uses a semi-structural model to estimate the impact of demographics on the natural rate in Japan. We find that demographic change has a significantly negative impact on the natural rate by lowering trend potential growth. We also find that the negative impact has been increasing over time amid stronger demographic headwinds. These findings highlight the importance of boosting potential growth to offset the negative demographic impact and lift the natural rate in Japan.
    Date: 2019–02–15
  3. By: Pietro Checcucci
    Abstract: The current trends in the ageing of the work-force, which are only in part counterbalanced by immigration flows, risk to expose European enterprises to a widespread situation of skills shortage, together with the loss of a huge wealth of knowledge and experience, as a consequence of baby boomers retirement. In this context, the automation/digitalisation of production represents one of the main tools in the hands of advanced economies and organizations to react to the shrinking of the labour force, while boosting productivity and containing costs. The paper attempts to provide an initial framing of the problematic relationship which intervenes between digital innovation and employability of older workers. The discussion will offer a possible interpretation of on-going transformations and a provisional explanation of the current situation in Italy. The contribution will summarize the most important demographic transformations which affected the labour market during these years, in the light of the (potentially) disruptive spread of digital technologies. The topic of the digital evolution of jobs’ task content and its influence on training needs will be addressed. Reflections concerning the relationship between the adoption of technological innovation and the quality of human capital will be presented and some hypothesis concerning the recent evolution of employers’ attitudes towards older workers, about facing technological innovation, will be suggested.
    Date: 2019–02
  4. By: Arthur Attema (Erasmus School of Economics - Erasmus University Rotterdam); Olivier L’haridon (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Gijs Van de Kuilen (TiSEM - Tilburg School of Economics and Management - Tilburg University [Netherlands])
    Abstract: We investigate univariate and multivariate risk preferences for health (longevity) and wealth. We measure attitudes toward correlation and attitudes toward higher order dependence structures such as cross-prudence and cross-temperance, making use of the risk apportionment technique proposed by Eeckhoudt et al. (2007). For multivariate gains, we find correlation aversion and cross-prudence in longevity and wealth. For losses, we observe correlation seeking and cross-imprudence. We do not find clear evidence for cross-temperance. Our results indicate that longevity and wealth are considered to be substitutes for gains, but not for losses. Second, univariate (higher order) risk preferences are comparable for longevity and wealth, although somewhat closer to linearity for wealth. Third, we find evidence that attitudes toward dependence structures in the health domain are sign-dependent.
    Keywords: multivariate risk attitudes,health,prudence,temperance
    Date: 2019–03
  5. By: Heathcote, Jonathan; Storesletten, Kjetil; Violante, Giovanni L.
    Abstract: This paper studies optimal taxation of earnings when the degree of tax progressivity is allowed to vary with age. The setting is an overlapping-generations model that incorporates irreversible skill investment, flexible labor supply, ex-ante heterogeneity in the disutility of work and the cost of skill acquisition, partially insurable wage risk, and a life cycle productivity profile. An analytically tractable version of the model without intertemporal trade is used to characterize and quantify the salient trade-offs in tax design. The key results are that progressivity should be U-shaped in age and that the average marginal tax rate should be increasing and concave in age. These findings are confirmed in a version of the model with borrowing and saving that we solve numerically.
    Keywords: income distribution; incomplete markets; Labor Supply; Life Cycle; Skill investment; Tax progressivity
    JEL: D30 E20 H20 H40 J22 J24
    Date: 2019–02
  6. By: Philipp Biermann (Otto von Guericke University Magdeburg); Juergen Bitzer (University of Oldenburg, Department of Economics); Erkan Goeren (University of Oldenburg, Department of Economics)
    Abstract: Based on data from the German Socio-Economic Panel (SOEP), we used a correlated random effects econometric framework to simultaneously estimate the within and between effects of age on subjective well-being. The proposed approach overcomes the ambiguity in the relationship between age and subjective well-being reported in a series of studies based on cross-sectional and/or longitudinal panel data. Our results suggest that a cubic-type functional relationship between well-being and age fits the data best, leading to highly significant coefficient estimates associated with the age variables, and consistent within and between effects of age on subjective well-being. A linear or quadratic functional relationship between well-being and age is not empirically supported, as the between and within estimates of age on well-being differ significantly from each other. The main findings are robust to the inclusion of a broad range of individual-level sociological, demographic, and economic controls, and to the inclusion of various interviewer controls such as survey experience, survey type, and interviewer fixed effects.
    Keywords: Subjective Well-Being, Life Cycle Happiness, Cohort Effects, Mundlak Approach, Correlated Random Effects, Fixed Effects, Between- and Within-Person Effects
    Date: 2019–03
  7. By: Christian Dippel
    Abstract: Using data covering a wide range of municipal public-sector pension plans from 1962– 2014, I establish that unfunded pension benefits grow faster under Democratic-party mayors. The result is borne out in a generalized difference-in-differences (DiD) specification in levels and in growth rates as well as in a regression discontinuity design (RDD) focusing on narrow mayoral races. There is some evidence that the partisan effect is concentrated in police and fire-fighter plans. Being on a council-manager system matters very little to these patterns. While Tiebout sorting has been the proposed explanation for previous findings that parties do not matter for a range of fiscal outcomes in U.S. cities, Tiebout sorting may actually accentuate fiscal profligacy in the case of unfunded pensions.
    JEL: D72 D73 H7 H75 J5
    Date: 2019–02
  8. By: Jesse Bricker; Alice M. Henriques; Elizabeth Llanes
    Abstract: Much of the education debt in the Survey of Consumer Finances (SCF) currently resides in households headed by person 40 years or older. These families are the focus of this note.
    Date: 2018–12–21

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