nep-age New Economics Papers
on Economics of Ageing
Issue of 2019‒07‒15
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Do Private Household Transfers to the Elderly Respond to Public Pension Benefits? Evidence from Rural China By Nikolov, Plamen; Adelman, Alan
  2. Pension, Retirement, and Growth in the Presence Heterogeneous Elderly By Makoto Hirono; Kazuo Mino
  3. Welfare Effects of a Non-Contributory Old Age Pension: Experimental Evidence for Ekiti State, Nigeria By Maria Laura Alzua; Natalia Cantet; Ana Dammert; Damilola Olajide
  4. Time to Care? The Effects of Retirement on Informal Care Provision By Björn Fischer; Kai-Uwe Müller
  5. Place-Based Drivers of Mortality: Evidence from Migration By Amy Finkelstein; Matthew Gentzkow; Heidi L. Williams
  6. Implications of Increasing College Attainment for Aging in General Equilibrium By Juan Carlos Conesa; Timothy J. Kehoe; Vegard M. Nygaard; Gajendran Raveendranathan
  7. A cross-sectional examination of the impact of health shocks on wealth: Evidence from English Panel data By Ashok Thomas; Aditya Kumar
  8. Demographics and Aggregate Household Saving in Japan, China, and India By Chadwick C. Curtis; Steven Lugauer; Nelson Mark
  9. Will Brexit Age well? Cohorts, Seasoning and the Age-Leave Gradient, Past, Present and Future By Barry Eichengreen; Rebecca Mari; Gregory Thwaites
  10. Demographics and Monetary Policy Shocks By Kimberly A. Berg; Chadwick C. Curtis; Steven Lugauer; Nelson C. Mark
  11. Bridge employment and full retirement intentions: the role of Person-Environment fit By Khaled Lahlouh; Delphine Lacaze; Richard Huaman-Ramirez

  1. By: Nikolov, Plamen; Adelman, Alan
    Abstract: Aging populations in developing countries have spurred the introduction of public pension programs to preserve the standard of living for the elderly. The often-overlooked mechanism of intergenerational transfers, however, can dampen these intended policy effects, as adult children who make income contributions to their parents could adjust their behavior in response to changes in their parents’ income. Exploiting a unique policy intervention in China, we examine using a difference-in-difference-in-differences (DDD) approach how a new pension program impacts inter vivos transfers. We show that pension benefits lower the propensity of adult children to transfer income to elderly parents in the context of a large middle-income country, and we also estimate a small crowd-out effect. Taken together, these estimates fit the pattern of previous research in high-income countries, although our estimates of the crowd-out effect are significantly smaller than previous studies in both middle- and high-income countries.
    Keywords: life cycle,retirement,pension,inter vivos transfers,middle-income countries,developing countries,China,crowd-out effect,aging
    JEL: D64 O15 O16 J14 J22 H55 R2
    Date: 2019
  2. By: Makoto Hirono (Graduate School of Economics, Doshisha University); Kazuo Mino (Graduate School of Economics, Doshisha University and Institute of Economics, Kyoto University)
    Abstract: This study explores the linkage between the labor force participation of the elderly and the long-run performance of the economy in the context of a two-period-lived overlapping generations model. We assume that the old agents are heterogeneous in their labor efficiency and they continue working if their income exceeds the pension that can be received in the case of full retirement. We inspect the long-run effects of changes in key factors that determine the labor force participation of the elderly. While the main part of the study treats a neoclassical growth model, we also discuss a model with endogenous growth.
    Keywords: retirement decision, labor force participation, population aging, pension system, capital accumulation
    JEL: E10 E62
    Date: 2019–07
  3. By: Maria Laura Alzua; Natalia Cantet; Ana Dammert; Damilola Olajide
    Abstract: Many countries in the developing world have implemented non-contributory old-age pensions. Evidence of the impact of such policies on the elderly in Sub-Saharan Africa is scarce, however. In this paper, we provide the first evidence from a randomized evaluation of an unconditional, non-contributory pension scheme targeted at the elderly in Ekiti State, Nigeria. Our findings show that treated beneficiaries self-reported better quality of life, more stable mental health, and better general health. We also provide evidence of spillover effects on labor outcomes and on household expenditure patterns as well as support for demand- side interventions aimed at improving the welfare of elderly poor citizens and other household members.
    Keywords: Randomized controlled trials, Aging, Non-contributory pensions, Health, Developing Countries
    JEL: C21 C93 H31 H55 H75 I38
    Date: 2019
  4. By: Björn Fischer; Kai-Uwe Müller
    Abstract: This paper analyzes the impact of a reduction in women's labor supply through retirement on their informal care provision. Using SOEP data from the years 2001- 2016 the analysis addresses fundamental endogeneity problems by applying a fuzzy regression discontinuity design. We exploit early retirement thresholds for women in the German pension system as instruments for their retirement decision. We find significant positive effects on informal care provided by women retiring from employment at the intensive and extensive margin that are robust to various sensitivity checks. Women retiring from full-time employment, highly educated women and women providing care within the household react slightly stronger. Findings are consistent with previous evidence and underlying behavioral mechanisms. They point to a time-conflict between labor supply and informal care before retirement. Policy implications are far-reaching in light of population aging. Prevalent pension reforms that aim to increase life-cycle labor supply threaten to reduce informal care provision by women and to aggravate the existing excess demand for informal care.
    Keywords: retirement; informal care; regression discontinuity; age threshold
    JEL: J22 J13 H43
    Date: 2019
  5. By: Amy Finkelstein; Matthew Gentzkow; Heidi L. Williams
    Abstract: We estimate the effect of current location on elderly mortality by analyzing outcomes of movers in the Medicare population. We control for movers' origin locations as well as a rich vector of pre-move health measures. We also develop a novel strategy to adjust for remaining unobservables, based on the assumption that the relative importance of observables and unobservables correlated with movers' destinations is the same as the relative importance of those correlated with movers' origins. We estimate substantial effects of current location. Moving from a 10th to a 90th percentile location would increase life expectancy at age 65 by 1.1 years, and equalizing location effects would reduce cross-sectional variation in life expectancy by 15 percent. Places with favorable life expectancy effects tend to have higher quality and quantity of health care, less extreme climates, lower crime rates, and higher socioeconomic status
    JEL: H51 I1 I11
    Date: 2019–06
  6. By: Juan Carlos Conesa; Timothy J. Kehoe; Vegard M. Nygaard; Gajendran Raveendranathan
    Abstract: We develop and calibrate an overlapping generations general equilibrium model of the U.S. economy with heterogeneous consumers who face idiosyncratic earnings and health risk to study the implications of exogenous trends in increasing college attainment, decreasing fertility, and increasing longevity between 2005 and 2100. While all three trends contribute to a higher old age dependency ratio, increasing college attainment has different macroeconomic implications because it increases labor productivity. Decreasing fertility and increasing longevity require the government to increase the average labor tax rate from 32.0 to 44.4 percent. Increasing college attainment lowers the required tax increase by 10.1 percentage points. The required tax increase is higher under general equilibrium than in a small open economy with a constant interest rate because the reduction in the interest rate lowers capital income tax revenues.
    JEL: H20 H51 H55 I13 J11
    Date: 2019–06
  7. By: Ashok Thomas (Indian Institute of Management, Kozhikode); Aditya Kumar (Indian Institute of Management, Kozhikode)
    Abstract: The study of individuals with low wealth and in particular with intense amount of decline in wealth holdings late in life is particularly relevant for the analysis of social security and public health insurance programmes. Individuals reached retirement with substantial saving, however drained wealth rapidly; perhaps in response to unexpectedly large expenditure shocksare our subject of this study. In this study we examine health problems and associated health care expenses impose on wealth on older individuals in England. The results point out that chronic conditions both existing and new health events significantly reduce the wealth as compared to mild conditions. The age of the chronic diseases additionally has impact on wealth negatively. In particular, severe existing chronic diseases aged of more than 3 years has greater impact than severe chronic diseases associated with individuals for more than 1 year. The empirical evidence exhibit no significant changes in wealth if the individual is having a mild chronic disease irrespective of the fact that they are diagnosed more than 3 years or 1 year ago. Additional health insurance, highly educated and remaining in a marriage seems to have mitigating effect on wealth decline in older ages.
    Keywords: Elders Chronic condition, Personal Wealth
    Date: 2019–03
  8. By: Chadwick C. Curtis (University of Richmond); Steven Lugauer (University of Notre Dame); Nelson Mark (University of Notre Dame and NBER)
    Abstract: We present a model of household life-cycle saving decisions in order to quantify the impact of demographic changes on aggregate household saving rates in Japan, China, and India. The observed age distributions help explain the contrasting saving patterns over time across the three countries. In the model simulations, the growing number of retirees suppresses Japanese saving rates, while decreasing family size increases saving rates for both China and India. Projecting forward, the model predicts lower saving rates in Japan and China.
    Keywords: Saving; Demographics; Life-Cycle; Japan; China; India
    JEL: E2 J1
  9. By: Barry Eichengreen; Rebecca Mari; Gregory Thwaites
    Abstract: In the UK’s 2016 referendum on EU membership, young voters were more likely than their elders to vote Remain. Applying new methods to a half century of data, we show that this pattern reflects both ageing and cohort effects. Although voters become more Eurosceptical as they age, recent cohorts are also more pro-European than their predecessors. Much of the pro-Europeanism of these recent cohorts is accounted for by their greater years of education. Going forward, the ageing of the electorate will thus be offset at least in part by the replacement of older cohorts with younger, better-educated and more pro-European ones. But we also document large nationwide swings in sentiment that have little to do with either seasoning or cohort effects. Hence these demographic trends are unlikely to be the decisive determinants of future changes in European sentiment. Rather, nationwide changes in sentiment, reflecting macroeconomic or other conditions, and the age-turnout gradient will be key.
    Keywords: Brexit, voting, demographics, APC effects, age period cohort effects
    Date: 2018
  10. By: Kimberly A. Berg; Chadwick C. Curtis; Steven Lugauer; Nelson C. Mark
    Abstract: We decompose the response of aggregate consumption to monetary policy shocks into contributions by households at different stages of the life cycle. This decomposition finds that older households have a higher consumption response than younger households. Amongst older households, the consumption response is also increasing in income. This, along with data on age-related net wealth, presents evidence for a wealth effect playing a role in driving the response patterns. This mechanism is studied further in a partial-equilibrium life-cycle model of consumption, saving, and labor-supply decisions. The model qualitatively explains the empirical patterns. Understanding the heterogeneity in consumption responses across age groups is important for understanding the transmission of monetary policy, especially as the U.S. population grows older.
    JEL: E0 E21 E52 J1 J11
    Date: 2019–06
  11. By: Khaled Lahlouh (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Delphine Lacaze (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Richard Huaman-Ramirez (EM Strasbourg - Ecole de Management de Strasbourg)
    Abstract: Purpose - This study explores the relationship between different categories of Person-Environment fit and two types of retirement intentions (i.e. full retirement and bridge employment). Design/methodology/approach - Data were collected from a convenience sample of 357 executives aged 50 and over, employed in French private sector companies. Hypotheses were tested using structural equation modeling. Findings - Perceptions of value congruence at vocational level and needs and supplies fit at organizational and job levels were positively related to the intention to hold a bridge employment after retirement. The fit between older worker's abilities and job demands was positively related to the two types of retirement intentions. Originality/value - The complexity of retirement transition is taken into account with the introduction of two types of retirement intentions. Person-Environment fit is proved to be an antecedent of career intentions after retirement.
    Keywords: Person-Environment fit,Bridge employment,Full Retirement
    Date: 2019–06–22

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