nep-age New Economics Papers
on Economics of Ageing
Issue of 2020‒12‒21
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Demographics, pension systems, and the current account: an empirical assessment using the IMF current account model By Miriam Koomen; Laurence Wicht
  2. New data collection on accrued-to-date social insurance pension entitlements in a national accounts context: Main findings By Catherine Girodet; Haukur Gudjonsson; Matthias Wicho; Bettina Wistrom; Jorrit Zwijnenburg
  3. COVID-19 has Significantly Impacted the Mobility and Activities of the Senior Population in Contra Costa County By Ragland, David R.; Schorr, Glenn; Felschundneff, Grace
  4. Does Recognition versus Disclosure of Pension Liabilities Affect Credit Ratings? Evidence from Japan By Masaki KUSANO
  5. Public-Sector Pension Plans and the Discount Rate Assumption: The Role of Political Incentives By Sutirtha Bagchi; James Naughton
  6. Organizing Outside Mobility of the Elderly People in Lorraine Region, France. How to Create and Capture Value. By Stoica Tatiana; Muller Paul; Szostak L. Bérangère
  7. The Impact of COVID-19 on the Mobility Needs of an Aging Population in Contra Costa County By Ragland, David R PhD, MPH; Schor, Glenn PhD, MPH; Felschundneff, Grace

  1. By: Miriam Koomen; Laurence Wicht
    Abstract: This paper empirically assesses the link between demographics, pension systems, and current account (CA) balances using the IMF External Balance Assessment (EBA) model. We propose two refinements to the EBA model. We first refine the existing demographic variables to better account for the entire population age structure of countries. Compared to the EBA specification, we find a more robust, smoother, and economically intuitive effect of demographics on CA balances across countries. We then introduce new indicators to account for pension systems. We find a positive and statistically significant relationship between the generosity and coverage of fully funded pension systems and CA balances. Our refinements broadly improve the EBA model fit, especially for advanced economies with a fully funded pension system.
    Keywords: Current account, demographics, public pensions, EBA model
    JEL: F32 F41 H55 J11
    Date: 2020
  2. By: Catherine Girodet; Haukur Gudjonsson; Matthias Wicho; Bettina Wistrom; Jorrit Zwijnenburg
    Abstract: This paper analyses results on social insurance pension liabilities and entitlements across OECD countries, on the basis of a new data collection. In addition to information on employment-related schemes (covered in the central framework of the national accounts), this new data collection also includes information related to social security pension schemes. As the latter make up a large part of pension liabilities and entitlements, this new data collection provides important new insights into the role of social insurance pensions across OECD countries and on how countries may be affected by ageing populations. The results show that pension liabilities and entitlements are, on average, more significant in European countries than in non-European OECD countries. Furthermore, the results show an increasing preference for defined contribution schemes over defined benefit schemes for private pension schemes, possibly in order to address some of the challenges brought about by an ageing society.
    Keywords: Ageing, Central framework, National accounts, Pensions, Social insurance
    JEL: E01 H55 H75 J32
    Date: 2020–12–11
  3. By: Ragland, David R.; Schorr, Glenn; Felschundneff, Grace
    Abstract: Meeting the mobility needs of an aging population is one of the most substantial challenges facing California in the coming decades. The number of residents age 60 and above will grow to 13.9 million by 2050, representing over 25% of the state population. Meanwhile, the number of residents age 85 and above is expected to increase by over 70% between 2010 and 2030. In 2018, the Safe Transportation Research and Education Center (SafeTREC) at UC Berkeley conducted a survey on transportation mobility issues among older adults in Contra Costa County in California. Results indicated, among other findings, that a majority of seniors are car dependent, that some older adults miss important activities due to mobility limitations, and that most older adults want to “age in place.” A follow-up survey of 302 Contra Costa County seniors ages 60 and above was conducted in June 2020, just as the COVID-19 pandemic changed life for all residents. The follow-up survey assessed the mobility needs and changes during the Shelter-in-Place order as well as how COVID-19 was impacting other areas of their lives, such as their economic situation, views of government regulatory efforts, feelings of social isolation, and work/employment status. This brief presents findings from the follow-up survey.
    Keywords: Medicine and Health Sciences, Social and Behavioral Sciences
    Date: 2020–11–01
  4. By: Masaki KUSANO
    Abstract: Whether credit market participants process disclosure and recognition of pension information differently has not been fully explored. To fill this gap, this study investigates whether the change in a pension accounting standard related to the recognition rule influences firms’ credit risk in Japan. Statement No. 26, Accounting Standard for Retirement Benefits, stipulates that firms recognize previously disclosed pension information on the balance sheet. Employing the implementation of Statement No. 26, I explore how differences between disclosed and recognized pension liabilities affect credit ratings. I find that off-balance sheet pension liabilities are associated with credit ratings prior to Statement No. 26. I also find similar relations between disclosure versus recognition of pension liabilities and credit ratings. Particularly, when pension information is highly reliable, off-balance sheet pension liabilities provide risk-relevant information, and the risk relevance of disclosed and recognized pension liabilities is statistically similar. My overall results reveal that, to the extent that accounting information is reliable, credit rating agencies fully incorporate off-balance sheet pension information into credit ratings, suggesting that mandating pension recognition does not affect firms’ credit ratings.
    Keywords: Recognition versus Disclosure, Pension Accounting, Credit Ratings, Reliability of Accounting Information
    JEL: M41 M48
    Date: 2020–12
  5. By: Sutirtha Bagchi (Department of Economics, Villanova School of Business, Villanova University); James Naughton (Darden School of Business, University of Virginia)
    Abstract: We provide evidence that political pressure creates incentives for elected officials to choose higher discount rates to value defined benefit pension promises, thus artificially reducing the short-term reported cost of these benefits. We generate our inferences using a unique panel dataset for all local pension plans from the state of Pennsylvania for 2003–2013, and by comparing the differential response to the GASB requirement to lower the discount rate after the Great Recession for plans that are managed by elected officials versus those that are managed by non-elected officials (i.e., municipal authority plans). We find that appointed officials in charge of municipal authority plans decreased their discount rate by 29 basis points more than elected officials in charge of municipal plans. This difference is not attributable to plan factors or financial reporting requirements, and suggests that political pressure leads to optimistic discount rate assumptions.
    Keywords: Public-sector pensions; Defined benefit pensions; Discount rate; Municipal authorities
    JEL: H75 M41 H83
    Date: 2020–12
  6. By: Stoica Tatiana; Muller Paul; Szostak L. Bérangère
    Abstract: The aim of this article is to propose an analysis framework for better identifying the value creation and capture mechanisms in innovation ecosystems. We start our questioning with investigating the literature on ecosystems and what they are, continue then with the one about what value is, what are the difficulties in defining what value creation stands for, and the one on mechanisms for value creation and capture, pointing out to the fact that the majority of literature if focusing on economic value. We exploit our research question in the context of the innovation ecosystem concerning the mobility of elderly people in Lorraine region, France, given the context of ageing population and more and more actors wondering how to satisfy the needs of the respective group of people. We found out that the innovations are of social nature, business model related, and of technological one.
    Keywords: value creation, value capture, ecosystems, mobility, elderly people, France, social innovation.
    JEL: O18 O32 O35
    Date: 2020
  7. By: Ragland, David R PhD, MPH; Schor, Glenn PhD, MPH; Felschundneff, Grace
    Abstract: In 2018, SafeTREC conducted a survey on transportation mobility issues among older adults in California. A follow-up survey planned for 2020, just as the COVID-19 pandemic changed life for all residents, was redesigned to assess mobility needs and changes during the Shelter-in-Place order and focused on COVID-19 impacts. Results indicate that the COVID-19 pandemic and subsequent Shelter-in-Place order have had a major impact on senior mobility. Communications for many were restricted to phone, email, texts, social media and video chats. Among those with a medical problem, just over 60% called a doctor or nurse line or went to a doctor’s office, while 11.2% went to an emergency room, and 8.6% did nothing. A total of 8% of respondents said they had run out of food or other important items during the Shelter-in-Place order. Rates of exercise outside the home dropped 20% between January and June 2020, and while over 60% sought outside entertainment in January 2020, by June 2020, nearly 70% accessed their entertainment online at home. Almost 80% of working respondents feared spreading or contracting COVID-19 because of their work or related transportation. Almost 20% felt a lack of companionship or closeness sometimes or often. Over 30% were worried about their current or long-term finances. A total of 84.5% strongly agreed or agreed that the Shelter-in-Place order was necessary. None of the respondents to the follow-up survey were diagnosed with COVID-19, and 88.2% were not concerned about risk of exposure from any member of their household.
    Keywords: Medicine and Health Sciences, Social and Behavioral Sciences, Mobility, accessibility, aged, travel behavior, surveys, demographics, communicable diseases, public health, COVID-19
    Date: 2020–11–01

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