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on Economics of Ageing |
| By: | Peter Eibich (Max Planck Institute for Demographic Research, Rostock, Germany); Angelo Lorenti (Max Planck Institute for Demographic Research, Rostock, Germany); Irene Mosca (Department of Economics Finance and Accounting, National University of Ireland, Maynooth) |
| Abstract: | Voluntary work is an important contribution for many non-profit organizations, such as charities, political and religious organizations. Older individuals make up a sizable share of the volunteer workforce, and volunteering is often regarded as an example of “active ageing”. In this study, we examine whether retirement has a causal effect on the frequency of voluntary work provision in three English-speaking countries – England, Ireland and the U.S. We draw on data from the ELSA, TILDA and HRS studies and employ a harmonised approach in the empirical analysis. We use eligibility ages for old age pensions in an instrumental variable estimation to address potential confounding. We find that retirement increases the frequency of voluntary work provision in all three countries, especially among men. This suggests that labour market policies aimed at increasing labour force participation at older ages might have unintended consequences for the size of the volunteer workforce. |
| Keywords: | retirement, voluntary work, instrumental variables. |
| JEL: | J22 J26 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n299-20.pdf&r=all |
| By: | Baksa, Daniel; Munkacsi, Zsuzsa; Nerlich, Carolin |
| Abstract: | Several European countries are currently considering reversing parts of their pension reforms that were adopted previously to improve sustainability. In this paper we present a framework that allows us to quantify the macroeconomic and fiscal costs of such reversals. We thereby integrate the country-specific information from the latest Ageing Report into a dynamic general equilibrium model with overlapping generations. Focusing on Germany and Slovakia as country cases, our model replicates the Ageing Report's pension expenditure projections very well. We calculate the macroeconomic impact of first the additional pension reforms needed to contain the public debt pressures arising from population ageing and second the costs of reform reversals. Our model results show that undoing past pension reforms would generate substantial adverse macroeconomic costs and could pose challenges for fiscal sustainability. JEL Classification: H55, J11, J26 |
| Keywords: | Ageing Report, overlapping generations model, population ageing, public pension, reform reversals |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20202396&r=all |
| By: | Nikolov, Plamen (State University of New York); Bonci, Matthew (University of Pennsylvania) |
| Abstract: | Precipitated by rapid globalization, rising inequality, population growth, and longevity gains, social protection programs have been on the rise in developing countries in the last three decades. However, the introduction of public benefits could displace informal mechanisms for risk-protection, which are especially prevalent in developing countries. In this paper, we critically survey the recent empirical literature on crowd-out effects in response to public policies, specifically in the context of developing countries. We review and synthesize patterns from the behavioral response to various types of social protection programs. Furthermore, we specifically examine for heterogeneous treatment effects by important socioeconomic characteristics. We conclude by drawing on lessons from our synthesis of studies. |
| Keywords: | life cycle, social protection, pension, inter vivos transfers, middle-income and low-income countries, developing countries, crowd-out effect |
| JEL: | D64 H31 H55 J14 J22 J26 O15 O16 R2 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp154&r=all |
| By: | Jo Mhairi Hale (Max Planck Institute for Demographic Research, Rostock, Germany); Maarten J. Bijlsma (Max Planck Institute for Demographic Research, Rostock, Germany); Angelo Lorenti (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Life-course sociodemographic and behavioral factors affect later-life cognitive function. Some evidence suggests that contemporaneous labor force participation also affects cognitive function; however, it is unclear whether it is employment itself or endogenous factors related to individuals’ likelihood of employment that protects against cognitive decline. We exploit innovations in counterfactual causal inference to disentangle the effect of postponing retirement on later-life cognitive function from the effects of other life-course factors. With the U.S. Health and Retirement Study (1996-2014, n=20,469), we use the parametric g-formula to estimate the population-averaged effect (PAE) of postponing retirement to age 67, the average treatment on the treated (ATT), the moderating effect of gender, education, and occupation, and the mediating effect via depressive symptoms and comorbidities. We find that postponing retirement is protective against cognitive decline, accounting for other life-course factors (age 67 PAE: 0.34, 95% confidence interval (CI): 0.20,0.47; ATT: 0.43, 95% CI: 0.26,0.60). The extent of the protective effect depends on subgroup, with the highest educated experiencing the greatest reduction in cognitive decline (age 67 ATT: 50%, 95% CI: 32%,71%). By using innovative models that better reflect the empirical reality of interconnected life-course processes, this work makes progress in understanding how retirement affects cognitive function. |
| Keywords: | America, age at retirement, ageing, labor, length of working life, retirement |
| JEL: | J1 Z0 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2020-013&r=all |
| By: | Luigi Ventura; Charles Yuji Horioka |
| Abstract: | In this paper, we analyze the wealth accumulation and saving behavior of the retired elderly in Italy using micro data from the “Survey of Italian Households’ Income and Wealth,” a panel survey of households conducted every two years by the Bank of Italy. We find that, on average, the retired elderly in Italy are decumulating their wealth (dissaving) but that their wealth decumulation rates are much slower than expected. Moreover, we also find that more than 40 percent of the retired elderly in Italy are continuing to accumulate wealth and that more than 80 percent are doing positive amounts of saving. Thus, the Wealth Decumulation Puzzle (the tendency of the retired elderly to decumulate their wealth more slowly than expected) appears to apply in the case of Italy, as it does in most other countries, before as well as after the Global Financial Crisis. Moreover, our regression analysis of the determinants of the wealth accumulation and saving behavior of the retired elderly in Italy suggests that the lower than expected wealth decumulation rates and dissaving of the retired elderly in Italy is due largely to intergenerational transfers (bequests and inter vivos transfers) and saving for precautionary purposes, especially the former. |
| JEL: | D12 D14 D64 E21 J14 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26986&r=all |
| By: | Andras Simonovits (Centre for Economic and Regional Studies) |
| Abstract: | Initial public pensions are indexed to the economy-wide average wages, but pensions in progress are indexed to prices, average wages or their combinations––varying across countries and periods. We create a simple overlapping cohorts framework to study the properties of indexing pensions in progress––emphasizing a neglected issue: close wage paths should imply close benefit paths even at real wage shocks. This robustness criterion of an equitable pension system is only satisfied by wage indexing, which in turn requires the adjustment of the accrual rate. To minimize the redistribution from low-earning short-lived citizens to high-earning long-lived ones, progression should be introduced. |
| Keywords: | public pensions, indexation, horizontal equity, pensions in progress |
| JEL: | D10 H55 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:2015&r=all |
| By: | Matthew S. Rutledge |
| Abstract: | In contrast to traditional employment, where employers provide health and retirement benefits, workers in nontraditional jobs have to seek out other options for health insurance coverage and retirement saving. How successful are they at finding alternatives? This study uses the Health and Retirement Study to examine older workers ages 50-64, who are both the largest cohort of workers in nontraditional jobs, and probably the group most in need of consistent health coverage and the ability to save for their imminent retirement. The study finds that about one-third of older workers in nontraditional jobs are uninsured, with the majority finding coverage through a spouseÕs employer or a past employer of their own. The Affordable Care Act has also helped these workers find coverage, most often through Medicaid; the study finds that workers in nontraditional employment in states that expanded Medicaid saw greater increases in coverage (especially public coverage) than similar workers in non-expansion states. While policy reform has helped increase health insurance coverage, workers in nontraditional jobs are largely left without convenient, tax-deferred retirement saving options, in part because their spouses in traditional employment do not tend to save more to compensate. These results suggest that policies such as auto-IRA plans may be especially useful to workers in nontraditional employment. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2020-9&r=all |
| By: | Jean-Pierre Aubry; Kevin Wandrei |
| Abstract: | As of 2019, 18 states offered something other than the traditional stand-alone defined benefit (DB) plan as their primary retirement plan. In the wake of the 2008 financial crisis, states were more likely to introduce a hybrid and/or cash balance plan rather than a stand-alone defined contribution (DC) plan. But less is known about the adoption of alternative plans among local governments. This brief documents the extent of the shift away from stand-alone DB plans for a sample of 180 major local governments to see how it compares to the changes at the state level. The brief proceeds as follows. The first section describes the alternative plan types that governments introduce when they shift away from a stand-alone DB plan. The second section describes the local government sample and documents the extent and nature of the shift. The third section describes the impact of the shift on government contributions and employee benefits. The final section concludes that the activity at the local level is similar to states in volume and geography, but localities rely more on stand-alone DC plans. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:crr:slpbrf:slp70&r=all |
| By: | Alicia H. Munnell; Gal Wettstein |
| Abstract: | Many older Americans need to work longer in order to achieve a secure retirement. The question is whether employers will hire and retain them. This paper reports on a 2019 survey of employer perceptions of the productivity, costs, and net value of their older workers relative to their younger ones. This survey replicates a similar 2006 effort, so it also allows a comparison of employer perceptions over a period when technology has evolved and the older workforce has grown. The key result of the 2019 survey is that older workers Ð in both professional and support positions Ð have reasonably good prospects for extending their careers. Although older workers are seen as more costly, they are also seen as more productive. Overall, the overwhelming majority of employers said older workers were Òas attractiveÓ or Òmore attractiveÓ than younger workers. The main finding that emerges from a comparison of the 2019 and 2006 results is an improvement in employer perceptions of support workers. It is always difficult to know how much weight to put on survey results. The question is the extent to which employer attitudes, which the survey measures, impact actual personnel decisions. Many other surveys have recorded similar positive evaluations of older workersÕ productivity, yet numerous studies have documented discrimination against older workers. Nevertheless, the 2019 survey paints a reasonably optimistic picture. It will not always be easy for older workers to extend their working careers. But these new results suggest that the potential exists. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2020-8&r=all |
| By: | Iris Grant; Iris Kesternich; Johannes Van Biesebroeck |
| Abstract: | Mostly due to population aging, the demand for long-term care (LTC) services is growing strongly. Historically, non-profit nursing homes dominated the German LTC market, but the recent entry wave was tilted towards for-profit competitors. Using a rich administrative dataset on all LTC facilities in Germany, we examine strategic interaction between these two ownership types in a static entry model. The estimates of competitive effects imply that non-profit and for-profit homes are substitutes, but competition is much stronger within-type, suggesting that they provide differentiated products. For-profit homes in particular act as if they operate in a different market segment, but over time their entry behavior has converged to that of the more established non-profits. Counterfactual simulations of proposed changes in government policy suggest a large impact on the fraction of markets that remain unserved or only served by a single type. |
| Date: | 2020–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:652689&r=all |
| By: | Simona Bignami; Daniela Ghio; Ari Van Assche |
| Abstract: | It is often highlighted that the largest number of COVID-19-related fatalities is found among the elderly. Although this is true, it is an important omission not to consider the differential trend of infections across age groups as governments devise strategies to flatten both the infections curve and the economic recession curve. We show how these strategies crucially depend on workforce demographics by drawing from the experience of Italy, Spain and the Netherlands. We suggest that restricting the age of essential workers can be a useful policy to mitigate the work-security trade-off while keeping the economy going. Il est souvent souligné que le plus grand nombre de décès liés au COVID-19 se trouve chez les personnes âgées. Bien que cela soit vrai, il y a une tendance différentielle des infections selon les groupes d'âge qui n’est pas considérée mais qui est très importante quand les gouvernements élaborent leurs stratégies pour aplanir à la fois la courbe des infections et la courbe de la récession économique. Nous montrons comment ces stratégies dépendent de manière cruciale de la démographie de la main-d'œuvre en regardant l'expérience de l'Italie, de l'Espagne et des Pays-Bas. Nous suggérons que la restriction de l'âge des travailleurs essentiels peut être une politique utile pour atténuer le compromis entre la sécurité du travail et le maintien de l'économie. |
| Keywords: | COVID-19,Demography,Age Gradient,Workforce,Flattening the Curve,Italy,Spain,Netherlands, COVID-19,Démographie,Gradient selon l’âge,Main d’oeuvre,Aplatir la courbe,Italie,Espagne,Hollande |
| Date: | 2020–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2020s-17&r=all |
| By: | Bergquist, Savannah; Costa-Font, Joan; Swartz, Katherine |
| Abstract: | Long-term care partnership (LTCP) programs were designed to both encourage middle-income individuals to purchase private long-term care insurance, and defer the time when an individual would become eligible for Medicaid to pay her long term care services and supports (LTSS). This paper exploits the timing of state Partnership implementation (including four pilot states) to evaluate the program’s effects on new yearly insurance applications and contract uptake. We draw upon data from the National Association of Insurance Commissioners (NAIC) on new long term care insurance (LTCI) purchases (traditional and Partnership) by US state (weighted by the population over age 65 to make the data comparable). We use a difference-in-differences strategy to obtain estimates of the program effect of the LTCP on the overall uptake of private LTCI, and specifically of LTCP contracts and applications for a subsample of states. Findings suggest no significant effect of LTCP on insurance uptake and an increase in insurance applications. This result points towards a substitution between traditional and partnership contracts. |
| Keywords: | long-term care (LTC) insurance; LTC partnerserhips (LTCP); subsidization; Medicaid; difference-in-difference (DD); insurance underwriting |
| JEL: | H31 I18 I38 J14 |
| Date: | 2018–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87504&r=all |
| By: | Ryoji Hasegawa (Fukuyama City University); Masaya Yasuoka (Kwansei Gakuin University) |
| Abstract: | Long-term care insurance plays an important role in Japan, where dual problems of an aging population and low birthrate have continued. Such insurance affects the macro-economy through many mechanisms, with both negative and positive influences. Although increased taxes and insurance premiums from long-term care decrease consumption, decreasing precautionary saving eventually increases consumption because of decreased risks of long-term care and mitigation of self-payment for people receiving long-term care services. Furthermore, effects on household consumption by the aging population and low birthrate are expected to differ among regional economies. This study, particularly addressing insurance effects on household consumption and the regional economy, develops a theoretical model for household consumption and assesses numerical examples of macroeconomic effects using parameters that are consistent with data for Japan. Furthermore, using a multi-regional input?output (MRIO) table at the prefectural level in Japan, we examine long-term care insurance effects on household consumption and economic ripple effects occurring regionally and nationally. The results reveal differences in insurance effects by region and by household generation. Gross Domestic Product (GDP), representing total economic activity, rises. Gross Regional Product (GRP) can also be pulled up. However, because of a difference in the degrees of increase in GRP in the respective regions, GRP inequality can be magnified. Specifically considering these results, we assess relations between regional economic disparities and improvements in long-term care insurance. |
| Keywords: | Elderly care subsidy, Household consumption, Multi-regional Input?Output (MRIO) table, Precautionary saving |
| JEL: | R15 E21 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:209&r=all |
| By: | François Vaillancourt |
| Abstract: | Various Canadian politicians and some analysts argue that we should do ‘’whatever it takes’’ to save lives threatened by the COVID-19 epidemic. A few politicians, here and in the USA, have put forward that one should sacrifice older people for the ‘economy’. The first proposal is understandable as a spontaneous reaction to the pain and suffering caused by COVID-19. However, this proposal is an inefficient and inequitable policy choice if governments mean that we should value the lives of those threatened by COVID-19 more than the lives of those endangered by usual diseases such as cancer or diabetes. The second proposal is not the choice one is faced with. To justify these two statements, we: 1) summarize the intervention plan; 2) present the number of individuals at risk; 3) discuss the use of quality adjusted live years (QALY to assess health innovations; 4) present the number, age distribution and expected QALYs of lives saved from COVID-19; 5) value these QALYs; 6) and derive from this an amount of resources to allocate to this epidemic that makes sense given that we value years lived equally and equitably across all diseases and over time. |
| Keywords: | QALY,Health Policy Recession,COVID-19,Intergenerational Equity,Equal Treatment of Illnesses, |
| Date: | 2020–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:cir:circah:2020pe-01&r=all |