nep-age New Economics Papers
on Economics of Ageing
Issue of 2020‒05‒04
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Aging and Health Care Expenditures: A Non-Parametric Approach By Normann Lorenz; Peter Ihle; Friedrich Breyer
  2. Measuring Intra-Generational Redistribution in PAYG Pension Schemes By Jonas Klos; Tim Krieger; Sven Stöwhase
  3. Demographic change in Switzerland: Impacts on economic growth in an Overlapping Generations Model By Hauser, Luisa-Marie; Schlag, Carsten-Henning; Wolf, André
  4. The effectiveness of social protection for long-term care in old age: Is social protection reducing the risk of poverty associated with care needs? By Tiago Cravo Oliveira Hashiguchi; Ana Llena-Nozal
  5. Prospective study on chronic diseases and healthcare costs for the south of France region, 2016-2028 By Bérengère Davin; S. Cortaredona; Valérie Guagliardo; Steve Nauleau; Bruno Ventelou; P. Verger
  6. Interpreting, analysing and modelling COVID-19 mortality data By Didier Sornette; Euan Mearns; Michael Schatz; Ke Wu; Didier Darcet
  7. Ageing-Driven Migration and Redistribution: Comparing Policy Regimes By Assaf Razin; Alexander Horst Schwemmer

  1. By: Normann Lorenz; Peter Ihle; Friedrich Breyer
    Abstract: One of the most important controversies in health economics concerns the question whether the imminent aging of the population in most OECD countries will place an additional burden on the tax payers who finance public health care systems. Proponents of the “red-herring hypothesis” argue that this is not the case because most of the correlation of age and health care expenditures (HCE) is due to the fact that the mortality rate rises with age and HCE rise steeply in the last years before death. The evidence regarding this hypothesis is, however, mixed. Our contribution to this debate is mainly methodological: We argue that the relationship of age, time to death (TTD) and HCE should be estimated non-parametrically. Using a large panel data set from the German Statutory Health Insurance, we first show that the parametric approach overestimates the expenditures of the high age classes and thus overstates the increase of future HCE due to aging. Secondly, we show that the non-parametric approach is particularly useful to answer the question whether age still has an impact on HCE once TTD is taken into account and find that it is clearly the case. This relationship is even more pronounced for long-term care expenditures (LTCE). We then show that the age-expenditure relationship is not stable over time: for many age classes, HCE in the last year of life grow considerably faster than HCE of survivors. We explore the impact of these findings on the simulation of future HCE and find that population aging will in fact contribute to rising HCE in the coming decades. We also find that the impact of different population projections provided by the statistical offices has a greater impact on these simulations than previously acknowledged. However, the total impact of demographics on future HCE and LTCE is dwarfed by the exogenous time trend, which is due to medical progress and increasing generosity of public LTC insurance.
    Keywords: health care expenditures, aging, red-herring hypothesis, non-parametric methods
    JEL: H51 J11 I19
    Date: 2020
  2. By: Jonas Klos; Tim Krieger; Sven Stöwhase
    Abstract: In this paper, we propose a novel index for measuring intra-generational redistribution in pay-as-you-go pension schemes. Our index solely requires information on contributions and pension benefits of retirees, enabling us to measure intra-generational redistribution isolated from possible inter-generational redistribution. We use contribution records of approx. 100,000 German individuals, who progressed into retirement in 2007-2015, to measure the level of intra-generational redistribution in the German statutory pension scheme (GRV). A recent reform of childcare benefit provision, which became effective in 2014, confirms the predictions of our index. The reform introduced additional benefits for a subgroup of substantial size of German mothers, due to which the index value for women, but not for men jumps up. Our findings suggests that GRV fulfils the ideal of a Bismarckian pension system without intra-generational redistribution for men, while women benefit from intra-generational redistribution.
    Keywords: PAYG pension systems, intra-generational redistribution, Beveridge vs. Bismarck, index, microdata, Germany
    JEL: H55 D31 C55
    Date: 2020
  3. By: Hauser, Luisa-Marie; Schlag, Carsten-Henning; Wolf, André
    Abstract: This paper analyses the macroeconomic implications of a future shift in the age structure of the Swiss population. It estimates the long-run effects for Swiss GDP growth and its components in an Overlapping Generations Model (OLG model). Recent population projections by the Federal Statistical Office (FSO) serve as a basis. To document the sensitivity of the results with respect to the demographic assumptions, simulations were undertaken for a range of alternative scenarios concerning fertility, migration and agespecific labor supply. Our projections over the time horizon 2018-2060 document a significant loss in terms of economic growth in both absolute and per capita terms. According to our simulations, this would primarily affect the income of the middle-aged age groups. Likewise, the process of ageing would have consequences for the composition of Swiss GDP: the share of government spending on domestic value added is simulated to increase, due to its demography-related components. A sensitivity analysis reveals that more favourable assumptions concerning future net immigration, fertility and labor market participation could mitigate, but not fully compensate these trends.
    Keywords: Ageing,OLG-models,Long-term GDP forecasts,Switzerland
    JEL: J11 C68 E37
    Date: 2020
  4. By: Tiago Cravo Oliveira Hashiguchi (OECD); Ana Llena-Nozal (OECD)
    Abstract: As people grow old and their health deteriorates, they are likely to require help with everyday activities that were once second nature; they need what is commonly termed long-term care (LTC). With demand for LTC in old age expected to grow, OECD countries face significant challenges in balancing financial sustainability with the provision of effective social protection against the financial risks associated with developing LTC needs – the cost of care can far exceed median incomes and its duration can be many years. This report provides a novel set of comprehensive and internationally comparable estimates of the adequacy, equity and efficiency of public social protection systems for LTC in old age in OECD countries and EU Member States. Using a set of “typical cases” of LTC need to ensure comparability, including different levels of severity and different ways in which needs can be met, this report shows cross-country and regional variations in the total costs of LTC services, the degree of public coverage, the out-of-pocket costs that care recipients face, and the associated poverty risks. The quantitative results are discussed in the context of how different countries design LTC benefits and schemes, including cost-sharing mechanisms. Finally, to illustrate the policy relevance of the analyses, the distributive effects of actual and hypothetical policy scenarios are simulated, including an international free personal care policy, and possible reforms in Ireland and England.
    JEL: H53 H75 I31 I38
    Date: 2020–04–28
  5. By: Bérengère Davin (ORS PACA - Observatoire régional de la santé Provence-Alpes-Côte d'Azur [Marseille]); S. Cortaredona (VITROME - Vecteurs - Infections tropicales et méditerranéennes - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université - IRBA - Institut de Recherche Biomédicale des Armées, IHU AMU - Institut Hospitalier Universitaire Méditerranée Infection); Valérie Guagliardo (ORS PACA - Observatoire régional de la santé Provence-Alpes-Côte d'Azur [Marseille]); Steve Nauleau (ARS PACA); Bruno Ventelou (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); P. Verger (VITROME - Vecteurs - Infections tropicales et méditerranéennes - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université - IRBA - Institut de Recherche Biomédicale des Armées, IHU AMU - Institut Hospitalier Universitaire Méditerranée Infection, ORS PACA - Observatoire régional de la santé Provence-Alpes-Côte d'Azur [Marseille])
    Abstract: Background: In France, Health Regional Agencies (HRA) have to elaborate a Public Health Plan for the 5 coming years. For estimating future population health needs and associated costs to adapt the health services on the regional territory, the HRA in southeastern France requested a prospective analysis, based on demographic and epidemiologic scenarios about major chronic diseases, to evaluate future trends. Methods: Six chronic diseases were selected: diabetes (1 or 2), cardiovascular diseases, respiratory diseases, cancers, neurological diseases and dementia. We used medico-administrative data from the National health insurance fund, and adapted algorithms to identify people with these diseases. We calculated prevalence rates according to gender and age and used two alternative scenarios (a constant one, and a trend-based one) to estimate the number of people with chronic diseases in 2023 and 2028, starting in 2016. We also estimated future healthcare costs according a constant and a trend-based scenario. Results: The algorithms detect reasonable rates of disease compared to official rates available for 2016. Due to demographic (ageing) and/or epidemiologic trends, the number of people with chronic diseases will highly increase during the next ten years in the South of France region. For instance, between 2016 and 2028, there will be from 15% to 20% more people with diabetes. Associated costs will also be higher (+33% between 2016 and 2028), especially those granted to nursing care (+40%). Conclusions: Burden of diseases and health expenditures are going to increase in the future. Projections are needed to help policymakers anticipating the required health services adaptation. Medico-administrative database are an invaluable source of data to do so. The next step of this project will consist in estimating those trends for smaller geographical areas.
    Keywords: population health,fiberoptic examinations anoscopy high resolution,nursing care,public health medicine,gender,respiration disorders,health insurance,health services,health expenditures,health care costs,geographic area,demography,cost of illness,chronic disease,dementia,cancer,type 2,aging,cardiovascular diseases,diabetes mellitus,nervous system disorders
    Date: 2019–11
  6. By: Didier Sornette (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute); Euan Mearns (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC)); Michael Schatz (ETH Zürich); Ke Wu (Southern University of Science and Technology; ETH Zurich - Department of Management, Technology, and Economics (D-MTEC)); Didier Darcet (Insight Research LLC)
    Abstract: We present results on the mortality statistics of the COVID-19 epidemics in a number of countries. Our data analysis suggests classifying countries in four groups, 1) Western countries, 2) East Block and developed South East Asian countries, 3) Northern Hemisphere developing countries and 4) Southern Hemisphere countries. Comparing the number of deaths per mil-lion inhabitants, a pattern emerges in which the Western countries exhibit the largest mortality. Furthermore, comparing the running cumulative death tolls as the same level of outbreak progress in different countries reveals several subgroups within the Western countries and further emphasises the difference between the four groups. Analysing the relationship between deaths per million and life expectancy in different countries, taken as a proxy of the preponderance of elderly people in the population, a main reason behind the relatively more severe COVID-19 epidemics in the Western countries countries is found to be their larger population of elderly people, with exceptions such as Norway, Canada and Japan, for which other factors seem to dominate. Our comparison between countries at the same level of outbreak progress allows us to identify and quantify a measure of efficiency of the level of stringency of confinement measures. We find that increasing the stringency from 20 to 60 decreases the death count by about 50 lives per million. Finally, we perform logistic equation analyses of confirmed cases and deaths as a means of tracking the maturity of outbreaks and estimating ultimate mortality, using four different models to identify model error and robustness of results. This quantitative analysis allows us to assess the outbreak progress in different countries, differentiating between those that are at a quite advanced stage and close to the end of the epidemics from those that are still in the middle of it. We also report large differences in our forecasts for the distribution of final death numbers per million with Austria and Germany exhibiting a factor at least three fewer deaths per millions than France of Italy. This raises many questions in terms of organisation, preparedness, governance structure, and so on.
    Keywords: COVID-19 epidemics, mortality, life expectancy, stringency of confinement measures, logistic equation, outbreak progress
    JEL: I12 I18 I30 M14 Q50
    Date: 2020–04
  7. By: Assaf Razin; Alexander Horst Schwemmer
    Abstract: Life cycle and insurance-type considerations dominate redistribution policy. Wage and fiscal prospects of ageing dominate migration policy. The paper compares distinct policy regimes, directed at migration and redistribution issues. Migration quotas, provision of social benefits, labor income taxation, and capital income taxation, are all endogenously determined in a policy-optimizing framework. The analysis makes a three-way comparison: free-migration regime vs. restricted-migration regime, welfare-state regime vs. no-migration-quota, no-redistribution regime, and low-income-majority regime vs. high-income-majority regime.
    JEL: F2 F22 H3 H4 J11
    Date: 2020–04

This nep-age issue is ©2020 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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