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on Economics of Ageing |
| By: | Francesca Carta (Bank of Italy); Francesco D'Amuri (Bank of Italy); Till von Wachter (University of California Los Angeles) |
| Abstract: | Raising statutory retirement ages has been a popular policy to increase the labor supply of older workers in the face of population aging. In this paper, we quantify the effect of a sharp and unexpected increase in retirement ages on firms’ input mix and economic outcomes using Italian administrative and survey data on employment, wages, value added and capital. Exploiting information on lifetime pension contributions for the universe of employees, we are able to quantify the extra number of older workers employed by each firm as a result of the reform. We find that a 10 per cent increase in older workers implies a rise in employment of young and middle-aged workers of 1.8 per cent and 1.3 per cent, respectively. Total labor costs and value added increase broadly in line with employment, with little impact on labor productivity and unit labor costs. These results suggest older workers are valuable to employers and that pension reforms postponing retirement can remove a constraint rather than place a burden on firms. |
| Keywords: | pension reform, wages, firms and labor market outcomes |
| JEL: | H55 J24 J26 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1297_20&r=all |
| By: | Péter Hudomiet; Michael D. Hurd; Susann Rohwedder |
| Abstract: | Although income and wealth are frequently used as indicators of well-being, they are increasingly augmented with subjective measures such as life satisfaction to capture broader dimensions of individuals’ well-being. Based on data from large surveys of individuals, life satisfaction in cross-section increases with age beyond retirement into advanced old age. It may seem puzzling that average life satisfaction would be higher at older ages because older individuals are more likely to experience chronic or acute health conditions, or the loss of a spouse. Accordingly, this empirical pattern has been called the “paradox of well-being.” We examine the age profile of life satisfaction of the U.S. population age 65 and older in the Health and Retirement Study (HRS) and also find increasing life satisfaction at older ages in cross-section. But based on the longitudinal dimension of the HRS life satisfaction significantly declines with age and the rate of decline accelerates with age. Widowing and health shocks play important roles in this decline. We reconcile the cross-section and longitudinal measurements by showing that both differential mortality and differential non-response bias the cross-sectional age profile upward: individuals with higher life satisfaction and in better health tend to live longer and to remain in the survey, causing average values to increase. We conclude that the optimistic view about increasing life satisfaction at older ages based on cross-sectional data is not warranted. |
| JEL: | I14 I31 J14 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28037&r=all |
| By: | Breyer, Friedrich; Lorenz, Normann; Ihle, Peter |
| 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 increase per-capita health care expenditures (HCE). Proponents of the "red-herring hypothesis" argue that this is not the case because most of the correlation of age and HCE is due to the compression of the mortality rate in old age and the high costs of dying. The evidence for 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 demonstrate 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. 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 regression |
| JEL: | H51 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224635&r=all |
| By: | Wu, Qi; Gao, Xin |
| Abstract: | Aging and an increasing retired population are a global challenge. Previous studies suggest that retirement affects economic behaviors of the retiree and his or her spouse, including consumption, health outcome, and time use. However, little is known about the intergenerational effects of parental retirement on adult children. This paper studies the effects of parental retirement on adult children's labor supply through intergenerational time and monetary transfer. We exploit the mandatory retirement age in China as the cut-off point and apply a regression discontinuity (RD) approach to four waves of the China Family Panel Studies (CFPS) Dataset. Our findings suggest that parental retirement reduces adult children's annual hours of labor supply by 3 to 4 percent. This reduction is especially pronounced for female children. We find that the reduction can be explained by parents' increasing demand for time and care from children due to the significant drop in parents' self-rated health upon retirement. Although both male and female children increased their monetary and time transfers to parents, we find that parents tend to make more transfers to sons compared to daughters. Daughters are also more likely to make transfers to parents after they retire, both in terms of money and in terms of time. We therefore urge policy makers to increase formal eldercare provisions and provide workplace amenities such as flexible working hours, especially for female employees. |
| Keywords: | Retirement, Labor Supply, Intergenerational Transfer, Gender Role |
| JEL: | D13 D64 J0 J22 J26 |
| Date: | 2020–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103914&r=all |
| By: | Tyrowicz, Joanna |
| Abstract: | Financing consumption of the elderly in the face of the projected increase in life expectancy is a key challenge for economic policy. Moreover, standard structural models with fully rational agents suggest that about 50-60 percent of old-age consumption is financed with voluntary savings, even in the presence of a fairly generous public pension system. This is clearly inconsistent with either the data, or the alarming simulations of old-age poverty in the years to come. Oldage saving (OAS) schemes are widely used policy instruments to address this challenge, but structural evaluations of such instruments remain rare. We develop a framework with incompletely rational agents: lacking financial literacy and experiencing commitment difficulties. We study a broad selection of OAS schemes and find that they raise welfare of financially illiterate agents and to a lesser extent improve welfare of agents with a high degree of time inconsistency. They also reduce the incidence of poverty at old age. Unfortunately, these instruments are fiscally costly, induce considerable crowd-out and direct fiscal transfers mostly to those agents, who need it the least. |
| Keywords: | old-age savings,incomplete rationality,welfare effects |
| JEL: | H31 H55 I38 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224526&r=all |
| By: | Röhe, Oke; Stähler, Nikolai |
| Abstract: | Since the mid-1970s, firm entry rates in the United States have declined significantly. This also holds for other OECD countries over the past years. At the same time, these economies experienced a gradual process of population aging. Applying a tractable life-cycle model with endogenous firm dynamics, we show that falling US firm entry rates can be explained by demographic transition. Specifically, our model simulations suggest that aging can account for up to one third of the observed decrease in US firm entry rates. In addition to the negative effects of a slowdown in working-age population growth on firm entry, our analysis points out that an increase in longevity may also be an important factor contributing to the decline in business dynamism, weighing on both firm entry and exit rates. |
| Keywords: | Life expectancy,Demographic transition,Endogenous firm dynamics |
| JEL: | H25 L52 E20 E62 L10 O30 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224603&r=all |
| By: | Jan van Ours (Erasmus University Rotterdam) |
| Abstract: | This paper studies mental health and loneliness in the Netherlands for individuals beyond age 50. The analysis is based on panel data over the period 2008 to 2018 and focuses on the effects of life events and aging. It appears that mental health gets worse and loneliness increases if individuals lose their partner or become unemployed. On average, mental health of males and high educated females improves at retirement. With respect to aging, the main conclusions are that mental health improves while loneliness goes down at least up to the high 70s. From the perspective of mental health and loneliness it does not seem to be a drag getting old. |
| Keywords: | mental health, loneliness, age, old people |
| JEL: | I31 J14 |
| Date: | 2020–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20200075&r=all |
| By: | Thomas Bernhardt; Catherine Donnelly |
| Abstract: | The number of people who receive a stable income for life from a closed pooled annuity fund is studied. Income stability is defined as keeping the income within a specified tolerance of the initial income in a fixed proportion of future scenarios. The focus is on quantifying the effect of the number of members, which drives the level of idiosyncratic longevity risk in the fund, on the income stability. To do this, investment returns are held constant and systematic longevity risk is omitted. An analytical expression that closely approximates the number of fund members who receive a stable income is derived and is seen to be independent of the mortality model. An application of the result is to calculate the length of time for which the pooled annuity fund can provide the desired level of income stability |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.16009&r=all |
| By: | Marianne Tenand (Erasmus School of Health Policy and Management |Rotterdam], EsCHER - Erasmus Centre for Health Economics Rotterdam); Arjen Hussem (PGGM); Pieter Bakx (Erasmus School of Health Policy and Management |Rotterdam], EsCHER - Erasmus Centre for Health Economics Rotterdam) |
| Abstract: | Free choice, ageing in place, financial accessibility and the containment of public spending are focal topics in the public debate about long-term care policies. In order to better balance these objectives, the Netherlands have developed new financing options, in-between between publicly subsidized home care and nursing home care for individuals with moderate to severe care needs. Those may choose to receive either vouchers (PGB), with which they can arrange care themselves, a Full Package at Home (VPT), or a Modular Package at Home (MPT). With VPT and MPT, a comprehensive package of care is provided in-kind, but in theory outside a regular nursing home. Little is known about the role played by these care options. This article describes the design of PGB, VPT and MPT, notably in terms of the cost-sharing between the recipient and the public long-term care insurance. In addition, it leverages aggregate statistics and individual-level administrative data to shed light on the use of these care options. Individuals with more limited care needs and higher-income individuals are more likely to take up these alternative care options, which are suggested to contribute to the development of non-contracted private nursing homes. By favoring the development of a two-tier system, these care options might undermine equity in long-term care receipt and in its financing, which underpins the Dutch social long-term care insurance. The Dutch case illustrates the trade-off between universal access and free choice in care. |
| Abstract: | Libre choix, maintien à domicile, accessibilité financière et maîtrise des dépenses publiques sont au coeur des débats sur la prise en charge de la dépendance. Afin de mieux concilier ces objectifs, les Pays-Bas ont développé de nouvelles prestations dépendance : les forfaits à domicile (VPT et MPT) et les prestations monétaires (PGB). Celles-ci permettent à la personne âgée de bénéficier d'une prise en charge globale tout en restant théoriquement à son domicile. Le rôle joué par ces nouvelles options de prise en charge est à ce jour peu documenté. Cet article explique leur fonctionnement, notamment du point de vue du partage des coûts entre puissance publique et bénéficiaire, et mobilise différentes sources statistiques (données administratives individuelles et données agrégées) pour éclairer les développements récents. Davantage mobilisés par les moins dépendants mais aussi par les bénéficiaires les plus aisés, ces financements semblent contribuer autant au maintien à domicile qu'au développement d'établissements privés non-conventionnés. En participant au développement d'un système de prise en charge à deux vitesses, ils pourraient remettre en cause l'équité dans la prise en charge et dans son financement qui sous-tend l'assurance sociale dépendance néerlandaise. Le cas des Pays-Bas fournit une illustration de la difficulté à mettre au point des dispositifs permettant de concilier libre choix et universalité de la prise en charge. |
| Keywords: | Long-term care,Ageing in place,Public financing,Equity,Dépendance des personnes âgées,Maintien à domicile,Financement public,Équité |
| Date: | 2020–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02985777&r=all |