nep-age New Economics Papers
on Economics of Ageing
Issue of 2020‒02‒03
twelve papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pension, Retirement, and Growth in the Presence Heterogeneous Elderly By Hirono, Makoto; Mino, Kazuo
  2. How Are Employers Responding to an Aging Workforce? By Robert L. Clark; Beth M. Ritter
  3. More to Live for: Health Investment Responses to Expected Retirement Wealth in Chile By Miller, Grant; Valdés, Nieves; Vera-Hernández, Marcos
  4. The boomer penalty: excess mortality among baby boomers in Canada and the United States By Enrique Acosta; Alain Gagnon; Nadine Ouellette; Robert R. Bourbeau; Marilia Nepomuceno; Alyson A. van Raalte
  5. NDC schemes and heterogeneity in longevity: proposals for redesign By Robert Holzmann; Jennifer Alonso Garcia; Héloïse Labit Hardy; Andrés Villegas
  6. Do informational nudges alter firms' hiring behavior of older workers? By Homrighausen, Pia; Lang, Julia
  7. Mortality by socio-economic class and its impact on the retirement schemes: How to render the systems fairer? By Anca-Stefania Jijiie; Jennifer Alonso Garcia; Séverine Arnold (-Gaille)
  8. Information weighting under least squares adaptive learning By Jaqueson K. Galimberti
  9. Sick of my parents? Consequences of parental ill health on adult children By Norén, Anna
  10. Dynastic Precautionary Savings By Corina Boar
  11. Is Happiness U-shaped Everywhere? Age and Subjective Well-being in 132 Countries By David G. Blanchflower
  12. Demand for Older Workers: What Do Economists Think? What Are Firms Doing? By Steven G. Allen

  1. By: Hirono, Makoto; Mino, Kazuo
    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 first inspect the key factors that determine the labor supply of old agents. We then examine analytically as well as numerically the long-run impact of labor participation of the elderly on capital accumulation.
    Keywords: retirement decision, labor force participation, population aging, pension system, capital accumulation
    JEL: E10 E62
    Date: 2019–11–20
  2. By: Robert L. Clark; Beth M. Ritter
    Abstract: The American population is aging and changes in the population’s age structure are leading to an aging of the nation’s workforce. In addition, changes to age specific participation rates are exacerbating the aging of the national labor force. An important challenge for firms and organizations is how does workforce aging affect labor costs, productivity and the sustainability of the organization. This paper examines employer responses to workforce aging including changes retirement policies, modification in working conditions, the adoption of phased retirement plans, and reforming other employee benefits.
    JEL: J11 J14 J21 J26 J33
    Date: 2020–01
  3. By: Miller, Grant; Valdés, Nieves; Vera-Hernández, Marcos
    Abstract: A poorly understood but important way that economic conditions influence health is through the incentives that they create for health investments. In this paper, we study how individuals’ current health investments respond to changes in expected future wealth, focusing on Chile’s 1981 public pension. We compile detailed administrative pension data linked to a rich household panel survey, and we then exploit discrete breaks in the reform’s impact on expected pension wealth across cohorts of Chileans using a fuzzy regression kink design to estimate how health behavior, preventive health care use, and chronic disease diagnoses respond to changes in expected pension wealth. Consistent with theoretical predictions, we find that greater expected pension wealth increases the use of medical services –and in turn, the detection of chronic diseases. More generally, our results provide new empirical evidence of forward-looking behavior consistent with the life-cycle and permanent income hypotheses.
    Keywords: Evaluación de impacto, Políticas públicas, Salud,
    Date: 2019
  4. By: Enrique Acosta (Max Planck Institute for Demographic Research, Rostock, Germany); Alain Gagnon (Max Planck Institute for Demographic Research, Rostock, Germany); Nadine Ouellette; Robert R. Bourbeau; Marilia Nepomuceno (Max Planck Institute for Demographic Research, Rostock, Germany); Alyson A. van Raalte (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Studies suggest that, relative to adjacent cohorts, baby boomers in Canada and the United States have experienced a slowdown, or even a deterioration, in mortality improvements. These findings are counterintuitive and surprising since the unprecedented improvements in early-life conditions experienced by baby boomers should have led to declines in morbidity and mortality in later life, as was the case for earlier generations. The present study explores the mechanisms that could have produced this “excess” mortality among the baby boom cohorts in Canada and in three racial/ethnic groups in the United States. Using micro-level mortality data from vital statistics systems, we analyzed the contributions of the causes of death that are likely driving this cohort’s excess mortality, and their dynamics over time. The analyses were done using demographic decomposition, visual, and statistical methods. We found evidence of a higher susceptibility of the trailing edge boomers (those born around 1960) to behavioral causes of death: namely, mortality from drugs, alcohol, HIV/AIDS, hepatitis C, COPD, and suicide. Most of these causes contributed to the all-cause mortality disadvantage of baby boomers through sustained cohort effects that followed the cohorts over time. This finding calls into question the assumption that secular improvements in early life conditions lead to a monotonic decline in cohort mortality rates. Instead, there may be important disruptions in the continuous progress in health and mortality, and it is possible that the baby boom generation represents one such disruption. This insight calls for a rethinking of the mechanisms that drive current age-period-cohort mortality patterns. The mechanisms that can generate the observed cohort disadvantage of baby boomers – such as the higher levels of distress and frustration as well as the riskier attitudes toward drug use and sexual practices that are constituent of the boomer generation identity – are addressed and discussed.
    Keywords: America, avoidable mortality, cohort analysis, excess mortality, exogenous mortality, mortality trends
    JEL: J1 Z0
    Date: 2020
  5. By: Robert Holzmann; Jennifer Alonso Garcia; Héloïse Labit Hardy; Andrés Villegas
    JEL: H53 H55 J32 G22 J08 J16
    Date: 2020
  6. By: Homrighausen, Pia (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Lang, Julia (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper analyses a local marketing campaign in Germany that provided information about unproven agerelated stereotypes and the value of older workers. The campaign was designed to increase the hiring rate of older workers. Using comprehensive register data, we find that the information provided by the campaign (via banners, interviews, job fairs and information brochures) did change firms' employment behavior. The cheap and mild intervention increased the employment rate of older workers on average by 3 percentage points. This increase, however, is attributable to an increase in job stability rather than to an increase in the hiring of older workers." (Author's abstract, IAB-Doku) ((en))
    Keywords: Informationsangebot - Auswirkungen, Personaleinstellung, ältere Arbeitnehmer, Arbeitslose, Beschäftigerverhalten, Beschäftigungseffekte, Stereotyp, Arbeitsagenturen, Integrierte Erwerbsbiografien, Potsdam, Brandenburg, Bundesrepublik Deutschland
    JEL: D83 J21 J23 J64 J78
  7. By: Anca-Stefania Jijiie; Jennifer Alonso Garcia; Séverine Arnold (-Gaille)
    Date: 2019–06–01
  8. By: Jaqueson K. Galimberti (School of Economics, Auckland University of Technology)
    Abstract: This note evaluates how adaptive learning agents weigh different pieces of information when forming expectations with a recursive least squares algorithm. The analysis is based on a new and more general non-recursive representaion of the learning algorithm, namely, a penalized weighted least squares estimator, where a penalty term accounts for the effects of the learning initials. The paper then draws behavioral implications of diferent specifications of the learning mechanism, such as the cases with decreasing-, constant-, regime-switching, and age-dependent gains. The latter is shown to imply the emergence of "dormant memories" as the agents get old.
    Keywords: bounded rationality, expectations, adaptive learning, memory
    JEL: D83 D84 D90 E37 C32 C63
    Date: 2020–01
  9. By: Norén, Anna (Uppsala University)
    Abstract: I study the consequences for labor market outcomes and sick leave of having an elderly parent in need of care. Using Swedish register data I compare the labor market outcome trajectories of adult children before and after their parent suffers a health shock. I find that employment and income of adult children are slightly reduced in the years leading up to the demise of their parent, but that the size of the impact is largest in the year, and the year after, parental demise. I also find that daughter’s sick leave absence increases in the year that the parent dies. No effects on labor market outcomes are found from having a parent suffering stroke. Furthermore, I find no clear gender differences between sons and daugh-ters in the impact of having a parent with increased care demand. Taken together, the results suggest that the opportunity costs of parental care need in the form of adverse labor market impacts are small.
    Keywords: Formal and Informal care; Elderly; Labor supply
    JEL: J14 J22
    Date: 2020–01–24
  10. By: Corina Boar
    Abstract: This paper provides evidence that parents accumulate savings to insure their children against income risk. I refer to this behavior as dynastic precautionary saving and quantify its extent using matched parent-child pairs from the Panel Study of Income Dynamics and exploiting variation in income risk across age, industries and occupations. I then build a model of altruistically linked overlapping generations, in which parents and children interact strategically, that is quantitatively consistent with the empirical evidence. I argue that strategic interactions are important for generating the observed dynastic precautionary behavior and use the model to show this component of household savings is quantitatively important for wealth accumulation, intergenerational transfers and consumption insurance.
    JEL: E21
    Date: 2020–01
  11. By: David G. Blanchflower
    Abstract: I draw systematic comparisons across 109 data files and 132 countries of the relationship between well-being, variously defined, and age. I produce 444 significant country estimates with controls, so these are ceteris paribus effects, and find evidence of a well-being U-shape in age in one hundred and thirty-two countries, including ninety-five developing countries, controlling for education, marital and labor force status. I also frequently find it without any controls at all. There is additional evidence from an array of attitudinal questions that were worded slightly differently than standard happiness or life satisfaction questions such as satisfaction with an individual's financial situation. Averaging across the 257 individual country estimates from developing countries gives an age minimum of 48.2 for well-being and doing the same across the 187 country estimates for advanced countries gives a similar minimum of 47.2. The happiness curve is everywhere.
    JEL: I31 J01
    Date: 2020–01
  12. By: Steven G. Allen
    Abstract: The employment rate for workers 55 and over has been increasing across the world for the last decade. This creates opportunities for employers to diversify their workforce and retain valuable knowledge and skills, while at the same time posing the challenge of rising labor costs and blocked opportunities for younger workers. This study summarizes in layperson’s terms the economic tradeoffs facing organizations as they design the optimal age structure of employees, as well as surveying recent research on how older workers fit into organizations. Empirical studies show that whereas wage and benefit costs increase with age, there is no conclusive evidence that productivity increases as well. Studies using macroeconomic data find no evidence that older workers block opportunities for the young, but two recent papers using a more disaggregated approach show that firms treat older and younger workers as substitutes. A key challenge facing older workers is the decline over the last 20 years in the odds of becoming a new hire. Although the turnover rate for older workers is much lower than for other age groups, employers have concerns about accommodating their work environment and work schedule preferences. Resume studies show age discrimination also plays a factor, especially for women. The paper concludes with suggestions for future research, including interindustry and international comparisons of microeconomic data on employment by age group and studies that take a close look within organizations that have engaged in innovative activities to hire or retain more older workers.
    JEL: J14 J2 J71
    Date: 2019–12

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