nep-age New Economics Papers
on Economics of Ageing
Issue of 2020‒01‒06
nineteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Evolution of the Elderly Labor Force Participation and Retirement in Brazil By Queiroz, Bernardo L; Ferreira, Matheus L.A.
  2. Social Security Expansion and Neighborhood Cohesion: Evidence from Community-Living Older Adults in China By Bradley, Elizabeth; Chen, Xi; Tang, Gaojie
  3. The Effects of a Retirement Age Reform on Couples' Labor Supply Decisions By Edith Sand; Shirlee Lichtman-Sadot
  4. Economic sector, demographic composition, educational attainment, and earnings in Brazil By Amaral, Ernesto F. L.; Faustino, Samantha Haussmann Rodarte; Gonçalves, Guilherme Quaresma; Queiroz, Bernardo L
  5. Getting Old Is No Picnic? Sector-Specific Relationship Between Workers Age and Firm Productivity By Konstantins Benkovskis; Olegs Tkacevs
  6. Choice of pension management fees and effects on pension wealth By Noelia Bernal; Javier Olivera Angulo
  8. The effect of automatic enrolment on employees working for small employers By Jonathan Cribb; Carl Emmerson
  9. The effects of the increase in the retirement age in the Netherlands By Egbert Jongen; Simon Rabaté; Tilbe Atav
  10. Maximising with-profit pensions without guarantees By M. Carmen Boado-Penas; Julia Eisenberg; Paul Kr\"uhner
  11. The impact of work on cognition and physical disability: Evidence from English women By James Banks; Jonathan Cribb; Carl Emmerson; David Sturrock
  12. The Impact of Bequest Motives on Retirement Behavior in Japan: A Theoretical and Empirical Analysis By Yuji Horioka, Charles; Gahramanov, Emin; Hayat, Aziz; Tang, Xueli
  13. CBO’s Long-Term Social Security Projections: Changes Since 2018 and Comparisons With the Social Security Trustees’ Projections By Congressional Budget Office
  14. Older Workers Need Not Apply? Ageist Language in Job Ads and Age Discrimination in Hiring By Ian Burn; Patrick Button; Luis Felipe Munguia Corella; David Neumark
  15. Program evaluation and ethnic differences: the Pension 65 program in Peru By Koen Decancq; Javier Olivera; Erik Schokkaert
  16. Why do we need economic growth? Macroeconomy and Low Birthrate/Aging Population (Japanese) By KOBAYASHI Keiichiro
  17. Prospects for the longevity of urban systems and regional economies under a shrinking population (Japanese) By HAMAGUCHI Nobuaki
  18. Current and future demographics of the veteran population, 2014–2024 By Amaral, Ernesto F. L.; Pollard, Michael S.; Mendelsohn, Joshua; Cefalu, Matthew
  19. Productividad y pensiones By Angel de la Fuente

  1. By: Queiroz, Bernardo L (Universidade Federal de Minas Gerais, Brazil); Ferreira, Matheus L.A.
    Abstract: In this paper, we investigate the length of retirement in a less developed economy with large public pension program, Brazil. We analyze the evolution of labor force participation and retirement since 1979 and estimate the expected length of retirement from 1979 to 2098 for both males and females. We use a stochastic model (Lee-Carter) to forecast labor force participation rates. Combining these estimates to UN mortality forecasts. We estimate the expected length of retirement. We find a steady decline in the labor force participation of young adults and elderly over time, mostly due to access to education and public pension programs, whereas for females we observed a constant increase for the prime-age women. Our findings also indicate that the expected length of retirement might increase from 10% to over 20% of Brazilian working lives, as people leave the labor force at early ages and live longer lives.
    Date: 2018–10–31
  2. By: Bradley, Elizabeth (Vassar College); Chen, Xi (Yale University); Tang, Gaojie (Jinan University)
    Abstract: Grants and services provided by the government may crowd out informal arrangements, thus weakening informal caring relations and networks. In this paper, we examine the impact of social security expansion on neighborhood cohesion of elders using China's New Rural Pension Scheme (NRPS), one of the largest existing pension program in the world. Since its launch in 2009, more than 400 million Chinese have enrolled in NRPS. We use two waves of China Health and Retirement Longitudinal Study (CHARLS) to examine the effect of pension receipt on two dimensions of neighborhood cohesion among older adults, i.e. participation in collective recreational activities (e.g., socializing and organizational activities) and altruistic activities (e.g., helping those in need in the community), and the frequencies of these activities. Employing an instrumental variable approach, our empirical strategy addresses the endogeneity of pension receipt via exploiting geographic variation in pension program roll-out. We find evidence that receiving pension only slightly reduces collective recreational activities while significantly crowding out altruistic activities in the communities.
    Keywords: neighborhood cohesion, pension, crowd out, diversity
    JEL: H55 I38 O22
    Date: 2019–12
  3. By: Edith Sand (Bank of Israel); Shirlee Lichtman-Sadot (Ben-Gurion University of the Negev)
    Abstract: This paper estimates how a pension reform in Israel that raised both men's and women's ages of retirement benefits concurrently affected spousal labor supply decisions. We utilize detailed administrative data in order to estimate spouse retirement decisions and to understand their interdependencies. We find that one's own retirement age deferral increases their own labor supply. However, spillover effects differ by gender. While for men, labor supply does not depend on their wife’s retirement age deferral, for women, postponing their husband’s retirement age delays their own retirement if their own retirement age has not been postponed.
    Date: 2019–12
  4. By: Amaral, Ernesto F. L. (Texas A&M University); Faustino, Samantha Haussmann Rodarte; Gonçalves, Guilherme Quaresma; Queiroz, Bernardo L (Universidade Federal de Minas Gerais, Brazil)
    Abstract: Brazil experienced population ageing and improvement in educational attainment between 1980–2010. Proportion of workers in the formal economic sector increased between 2000–2010. Earnings decreased from 1980 to 1991 and increased in 2000. However, earnings in the formal economic sector decreased again in 2010. We estimate associations of individual- and area-level variables with individual earnings of male workers living in urban areas in Brazil. Ordinary least squares regressions estimate variations on earnings of male workers, using the 1980–2010 Demographic Censuses. Individual independent variables include age, education, economic sector, race/color, marital status, religion, and region of residence. Contextual independent variables consider demographic, educational, and economic sector compositions by areas of residence. Considering individual-level variables, older and better educated workers have higher earnings. Workers in the formal economic sector have higher earnings than in the informal sector. For area-level variables, higher proportions of people working in the formal economic sector have positive associations with earnings. Proportions of people in age-education groups have negative associations with earnings mostly among older workers. For models by economic sector, proportions in age-education groups have higher positive coefficients in the informal sector, compared to the formal sector. Transitions in demographic, educational, and economic sector compositions are correlated with earnings. These effects generate greater economic inequality in the informal sector than in the formal sector. Our main contribution is the estimation of models about associations of individual earnings with individual and area-level variables, which can be replicated for other countries.
    Date: 2019–01–22
  5. By: Konstantins Benkovskis (Bank of Latvia); Olegs Tkacevs (Bank of Latvia)
    Abstract: This study provides new evidence on sector-specific differences in the age-productivity profiles in a country that has witnessed substantial shifts in the economic structure and features flexible labour market and high labour force participation among the elderly. Using a matched employer–employee dataset of Latvian firms, the paper unveils a conventional hump-shaped or downward sloping relationship in manufacturing and trade, but almost no or very small negative effect of ageing workforce in knowledge-intensive service sectors that largely employ high-skilled white-collar employees. The results suggest that investing in human capital, in particular training of elderly employees as well as addressing severe skill shortages in the ICT services sector have to be considered to reduce the downward pressure of ageing on firm performance. It also highlights the importance of efforts made by public institutions in improving health care and promoting healthier lifestyles to increase the number of healthy life years.
    Keywords: firm productivity, ageing population, age-productivity profile
    JEL: C23 L25
    Date: 2019–11–04
  6. By: Noelia Bernal; Javier Olivera Angulo
    Abstract: We study a policy change to the management fees of pension funds that the Government of Peru implemented in 2013 to shed light on the effects of individual choices on pension wealth. The reform established a new balance fee (default option) that is a percentage of the pension balance unless the individual opts to remain with the current load factor fee that is a percentage of salary. We use administrative data to simulate pension balances that account for the individual’s choice of fee and the corresponding counterfactual. Our results indicate that the reform has been potentially adverse to 63.8 percent of individuals. This figure is composed of 40.4 percent of individuals that were assigned to the default option and 23.4 percent who voluntary chose the load fee. These results reflect that the policy is badly designed and that individuals have an alarming lack of soundness in their financial decisions. We also detect heterogeneity in the intensity of the losses and gains due to the reform, where the losses are larger than the gains. In particular, younger and poorer individuals and those who were assigned to the balance fee show higher losses. Moreover, the change in the fee is also associated with increasing inequality in pension wealth and a reduction in the people’s well-being.
    Keywords: Pension savings, management fees, individual retirement accounts, pension reform, inequality, Peru
    Date: 2019–05–22
  7. By: Bérangère Legendre (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Annaïg-Charlotte Pedrant (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Mareva Sabatier (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: This paper analyzes retirement decisions from a household perspective, treating the retirement timing of spouses as potentially interdependent choices. To identify the determinants of retirement decisions by couples and the effects of spousal retirement, this research estimates bivariate probit models in a multi-country setting. The results show a significant joint retirement trend: Both men and women are more likely to retire if their spouse already has retired. Strong asymmetric behaviors arise by gender though, with high crosscountry heterogeneity, reflecting institutional differences in both pension and public health systems.
    Keywords: joint retirement decision,intra-household decision-making process,asymmetric behaviors,institutions
    Date: 2018
  8. By: Jonathan Cribb (Institute for Fiscal Studies and Institute for Fiscal Studies); Carl Emmerson (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: Existing evidence on the effectiveness of automatic enrolment is focused on large employers. We compare pension savings of employees working for small employers who were pseudo-randomly affected by automatic enrolment with those working for small employers who, at the same moment in time, were not. We find that automatic enrolment substantially increased workplace pension participation among those working for small employers by around 45 percentage points to reach 70% of targeted employees – with most, but not all, brought in at relatively low rates of pension saving. Despite this large increase, this leaves pension participation substantially below the very high levels (around 90%) seen under automatic enrolment among the largest employers in the United Kingdom and the United States. We find evidence that this lower participation rate is not explained either by differences in the observed characteristics of workers between smaller and larger employers, or by differences in the pension contributions offered by employers.
    Keywords: pensions,automatic enrolment,non-wage benefits,private pensions,small employers
    Date: 2019–03–26
  9. By: Egbert Jongen (CPB Netherlands Bureau for Economic Policy Analysis); Simon Rabaté (CPB Netherlands Bureau for Economic Policy Analysis); Tilbe Atav (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: The increase in the statutory retirement age reduced the number of pensioners. About one third of this drop results in additional employment. Net savings for the government are about 80% of direct savings on retirement (AOW) benefits. These are the main findings of the discussion paper ‘The effects of the increase in the retirement age in the Netherlands’. In this paper CPB studies the effects of the recent increases in the statutory retirement age. In the empirical analysis we use differences-in-differences, looking at the labour market outcomes of different birth cohorts that face different statutory retirement ages, and administrative data. The findings of this research have been used in the background document (in Dutch) ` Arbeidsparticipatie en gewerkte uren tot en met 2060 ’.
    JEL: J14 J26
    Date: 2019–12
  10. By: M. Carmen Boado-Penas; Julia Eisenberg; Paul Kr\"uhner
    Abstract: Currently, pension providers are running into trouble mainly due to the ultra-low interest rates and the guarantees associated to some pension benefits. With the aim of reducing the pension volatility and providing adequate pension levels with no guarantees, we carry out mathematical analysis of a new pension design in the accumulation phase. The individual's premium is split into the individual and collective part and invested in funds. In times when the return from the individual fund exits a predefined corridor, a certain number of units is transferred to or from the collective account smoothing in this way the volatility of the individual fund. The target is to maximise the total accumulated capital, consisting of the individual account and a portion of the collective account due to a so-called redistribution index, at retirement by controlling the corridor width. We also discuss the necessary and sufficient conditions that have to be put on the redistribution index in order to avoid arbitrage opportunities for contributors.
    Date: 2019–12
  11. By: James Banks (Institute for Fiscal Studies and Institute for Fiscal Studies and University of Manchester); Jonathan Cribb (Institute for Fiscal Studies and Institute for Fiscal Studies); Carl Emmerson (Institute for Fiscal Studies and Institute for Fiscal Studies); David Sturrock (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: Delaying retirement has significant positive effects on the average cognition and physical mobility of women in England, at least in the short run. Exploiting the increase in employment of 60-63 year old women resulting from the increase in the female State Pension Age, we show that working substantially boosts performance on two cognitive tests, particularly for singles. We also find large improvements in measures of physical disability as a result of working: substantial increases in walking speed, and lower reports of mobility problems. However, for women in sedentary occupations, work reduces walking speed, due to lower levels of exercise.
    Date: 2019–06–11
  12. By: Yuji Horioka, Charles; Gahramanov, Emin; Hayat, Aziz; Tang, Xueli
    Abstract: In this paper, we conduct a theoretical and empirical analysis of the impact of bequest motives on the work and retirement behavior of households in Japan using micro data from the Preference Parameters Study of Osaka University. Our empirical findings are consistent with our theoretical model and show that respondents with an altruistic or strategic/exchange bequest motive work more at the intensive margin than those without any bequest motive but that respondents with a strategic or exchange bequest motive work less at the extensive margin (i.e., retire earlier) than those without any bequest motive. Our findings for the strategic or exchange motive suggest that respondents with such a motive tend to work harder than others before they retire so that they can earn more, leave a larger bequest to their children, and elicit more care from them but that they tend to retire earlier than others so that they can start receiving care for themselves and their spouses from their children sooner. A policy implication of our findings is that the exchange of bequests for the care of parents by children may be very sensitive to the inheritance tax framework.
    Keywords: Altruistic bequest motive, bequest motives, exchange bequest motive, inheritances, Japan, labor supply, retirement, strategic bequest motive, working hours, D15, D64, J14, J22, J26
    Date: 2019–12
  13. By: Congressional Budget Office
    Abstract: Each year, CBO updates its projections of the Social Security system’s finances. CBO’s latest projections of the Social Security system’s financial outlook are similar to those it produced last year. The projected 75-year actuarial balance remains at −1.5 percent of gross domestic product. As a percentage of taxable payroll, the projected actuarial balance worsened slightly from −4.4 percent to −4.6 percent.
    JEL: H50 H55 H60 H68 J26
    Date: 2019–12–12
  14. By: Ian Burn; Patrick Button; Luis Felipe Munguia Corella; David Neumark
    Abstract: We study the relationships between ageist stereotypes – as reflected in the language used in job ads – and age discrimination in hiring, exploiting the text of job ads and differences in callbacks to older and younger job applicants from a previous resume (correspondence study) field experiment (Neumark, Burn, and Button, 2019). Our analysis uses methods from computational linguistics and machine learning to directly identify, in a field-experiment setting, ageist stereotypes that underlie age discrimination in hiring. We find evidence that language related to stereotypes of older workers sometimes predicts discrimination against older workers. For men, our evidence points most strongly to age stereotypes about physical ability, communication skills, and technology predicting age discrimination, and for women, age stereotypes about communication skills and technology. The method we develop provides a framework for applied researchers analyzing textual data, highlighting the usefulness of various computer science techniques for empirical economics research.
    JEL: J14 J23 J7 J78
    Date: 2019–12
  15. By: Koen Decancq; Javier Olivera; Erik Schokkaert
    Abstract: We show that the introduction of a non-contributory pension program (Pension 65) in Peru had remarkably different effects for its three main ethnic groups, i.e., Mestizo, Quechua, and Aymara. The Aymara beneficiaries of the program have experienced larger increases in health and life satisfaction compared to other Peruvians. Using a panel life satisfaction regression, we find evidence for preference heterogeneity between the Aymara and the other ethnic groups that is consistent with the observed differences. Finally, we turn to the question of how the pension program can be evaluated in a robust manner while respecting the preference heterogeneity between the ethnic groups. We propose the natural criterion that a program benefits a recipient if she is lifted to a higher indifference curve. We show that the pension program was beneficial for all groups, but that more Aymara beneficiaries were lifted to a higher indifference curve compared to other Peruvians. Our proposed criterion can be useful to evaluate programs in all cases where preference differences matter.
    Date: 2018–11–27
  16. By: KOBAYASHI Keiichiro
    Abstract: Abstract in English is not available.
    Date: 2019–10
  17. By: HAMAGUCHI Nobuaki
    Abstract: Abstract in English is not available.
    Date: 2019–10
  18. By: Amaral, Ernesto F. L. (Texas A&M University); Pollard, Michael S.; Mendelsohn, Joshua; Cefalu, Matthew
    Abstract: We project the population of United States veterans between 2014 and 2024 using a cohort component population projection method that provides estimates by age, sex, race/ethnicity, service era and geographic location. We also analyze distance of the projected veteran population to medical and health centers. Our research strategy integrates several methodological procedures, which can be applied to other subgroups of the American population in order to estimate future demographic trends at the local level. Baseline data for national projections came from the 2000 Census, which was the last census to collect information about veterans. We factored in estimates of mortality, adjusted for demographic characteristics, and added data from the U.S. Department of Defense on veterans entering the population after 2000. We estimated migration flows of veterans within the country using gravity models. Supplementary data came from American Community Surveys and accounted for a variety of factors, including age, sex, race/ethnicity, service era, population size of sending and receiving areas, and distance between areas. We project that the population of U.S. veterans will decrease by 19 percent over the next 10 years: from 21.6 million in 2014 to 17.5 million in 2024. The population will have a slightly higher proportion of older veterans. There will be modest changes in the demographic mix by sex and race/ethnicity. Between 2014 and 2024, the proportion of female veterans will increase 3 percentage points, from 8 to 11 percent. The share of non-Hispanic white males will decrease from 80 to 76 percent over the same period. The service era composition will change in the period. Veterans from the Vietnam conflict will decrease from 31 to 29 percent, while those from the Gulf War and Post-9/11 conflict will increase from 27 to 42 percent between 2014 and 2024. We estimate that, geographically, the veteran population will become more concentrated in urban areas, and the relative proportion of their population in the Ohio River Valley region will diminish.
    Date: 2018–04–20
  19. By: Angel de la Fuente
    Abstract: La productividad es uno de los factores clave para la sostenibilidad y suficiencia de los sistemas públicos de pensiones. En un sistema contributivo y de reparto como el español, la pensión viene a ser una media de los salarios percibidos por el trabajador durante buena parte de su carrera laboral y los ingresos del sistema de pensiones en cada momento dependen de la masa salarial agregada. Puesto que en una economía de mercado los salarios reflejan la productividad del trabajo, al menos a medio y largo plazo, este último factor se convierte en un determinante crucial del nivel sostenible de generosidad del sistema de pensiones y de su salud financiera. Una mayor productividad se traduce directamente en una pensión más generosa a nivel individual y hace posible pagar tales pensiones a nivel agregado. Algo menos obvio pero también muy importante es el papel de la tasa de crecimiento de la productividad. Cuánto mayor sea esta tasa, otras cosas iguales, más generosas podrán ser las pensiones en relación a lo cotizado, o mejor será la situación financiera del sistema dado su nivel de generosidad.
    Date: 2019–12

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