nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒02‒15
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Informality and the Challenge of Pension Adequacy: Outlook and Reform Options for Peru By Christoph Freudenberg; Frederik G Toscani
  2. The Future of the Elderly Population Health Status: Filling a Knowledge Gap By Vincenzo Atella; Federico Belotti; Kim Daejung; Dana Goldman; Tadeja Gracner; Andrea Piano Mortari; Bryan Tysinger
  3. Longevity Perceptions and Saving Decisions during the COVID-19 Outbreak: An Experimental Investigation By Abigail Hurwitz; Olivia S. Mitchell; Orly Sade
  4. Unearned Income and Labor Supply: Evidence from Survivor Pensions in Austria By René Böheim; Michael Topf
  5. Motivated Beliefs and the Elderly's Compliance With Covid-19 Measures By Ferdinand von Siemens
  6. Elderly Care and Multiple Monies By Hajime Tomura
  7. Living and Dying in America: An Essay on Deaths of Despair and the Future of Capitalism By Christopher J. Ruhm
  8. Family Characteristics and Economic Development By Le Bris, David
  9. Mobility under the COVID-19 Pandemic: Asymmetric Effects across Gender and Age By Francesca G Caselli; Francesco Grigoli; Damiano Sandri; Antonio Spilimbergo
  10. Climate change and population: an integrated assessment of mortality due to health impacts By Antonin Pottier; Marc Fleurbaey; Stéphane Zuber

  1. By: Christoph Freudenberg; Frederik G Toscani
    Abstract: Past reforms have put the Peruvian pension system on a largely fiscally sustainable path, but the system faces important challenges in providing adequate pension levels for a large share of the population. Using administrative microdata at the affiliate level, we project replacement rates in the defined benefit (DB) and defined contribution (DC) pillars over the next 30 years and simulate the impact of various reform scenarios on the average level and distribution of pensions. In the DB pillar, the regressive minimum contribution period should be re-thought, while in the DC pillar a broadening of the contribution base and/or an increase in contribution rates would help increase replacement rates relative to the baseline forecast of 25-33 percent. A higher net real rate of return than assumed in the baseline would also have a significant positive impact. In the medium-term, labor market reform to tackle informality, and a broad pension reform to restructure the system and avoid competition between the DB and DC pillars should be a priority. Given low pension coverage, having a strong non-contributory pillar will remain important for the foreseeable future.
    Keywords: Pensions;Pension spending;Retirement;Aging;Wages;WP,replacement rate,retirement age,SNP affiliate,SPP data
    Date: 2019–07–11
  2. By: Vincenzo Atella (DEF and CEIS, Università di Roma "Tor Vergata"); Federico Belotti (DEF and CEIS, Università di Roma "Tor Vergata"); Kim Daejung (Korea Institute for Health and Social Affairs); Dana Goldman (University of Southern California); Tadeja Gracner (RAND Corporation); Andrea Piano Mortari (CEIS, Università di Roma "Tor Vergata"); Bryan Tysinger (University of Southern California)
    Abstract: The ageing process in OECD countries calls for a better understanding of the future disease prevalence, life expectancy and patterns of inequalities in health outcomes. In this paper we present the results obtained from several dynamic microsimulation models of the Future Elderly Model (FEM) family for thirteen OECD countries, with the aim of reproducing for the first time comparable longterm trends in individual health status across OECD. The FEM is a multi-risk multi-morbidity dynamic microsimulation model to project health status and health demand. Given the dynamic structure of the model, we allow individual health status to evolve over time according to individual characteristics. Our model provides forecasts of the evolution of life expectancy and prevalences of major chronic conditions and disabilities, overall, by gender and by education. We find a catch-up of the considered European countries main chronic conditions prevalence with the US and a relevant and persistent educational gradient in the health status of elderly patients. Our findings represent a valid contribution to support policy makers in designing and implementing effective interventions in the healthcare sector.
    Keywords: Population ageing, Disease burden, Microsimulation, Health care demand, Education gradient, OECD.
    JEL: I1 J1 J11 J14
    Date: 2020–12–22
  3. By: Abigail Hurwitz; Olivia S. Mitchell; Orly Sade
    Abstract: We experimentally study individuals’ perceptions about and advice to others regarding retirement savings and annuitization during the pandemic. Many people recommend that others save more for retirement, but those most affected by the pandemic tell others to save and annuitize less. We investigate two possible channels for this result and show that the pandemic does not substantially alter optimism regarding survival probabilities. Hence, we conclude that economic factors are driving our results. Consequently, some financial ramifications of the COVID-19 outbreak are yet to be revealed, as the pandemic is having longer-term effects on peoples’ willingness to save and annuitize.
    JEL: G41 G5 J26
    Date: 2021–01
  4. By: René Böheim; Michael Topf
    Abstract: We study the effect of lower unearned income on labor supply. To identify the causal effect of an unexpected reduction in unearned income, we exploit a policy reform that lowered survivor pensions in Austria. Men widowed after the survivor pension reform received an approximately 34% lower survivor pension than men widowed before the reform. We follow the employment history of both groups for 150 months and estimate the reform’s effect on labor supply using a regression discontinuity design. The effect of the lower pension is evident immediately after the death of their spouse, is persistent over time, becomes more pronounced over time, and is robust across model specifications. Our baseline result suggests a 3.5 to 5.4 percentage point higher employment rate for survivors in the low pension regime in the long run. The estimated effect corresponds to a labor supply elasticity at the extensive margin with respect to the changes in total income of about –0.9 to –1.3.
    Keywords: labor supply, unearned income, regression discontinuity design
    JEL: I38 J22 J48
    Date: 2021
  5. By: Ferdinand von Siemens
    Abstract: Although the elderly are more vulnerable to COVID-19, the empirical evidence suggests that they do not behave more cautiously in the pandemic than younger individuals. This theoretical model argues that some individuals might not comply with the COVID-19 measures to reassure themselves that they are not vulnerable, and that the incentives for such self-signaling can be stronger for the elderly. The results suggest that communication strategies emphasizing the dangers of COVID-19 could backfire and reduce compliance among the elderly.
    Keywords: motivated beliefs, compliance behaviour, age, health, Covid-19
    JEL: C70 D91 D82 I12 I18
    Date: 2021
  6. By: Hajime Tomura (Faculty of Political Science and Economics, Waseda University)
    Abstract: This paper presents an overlapping generations model in which old generations require specific services from young generations due to idiosyncratic shocks. An example of such services is elderly care. The model shows that a two-money system in which fiat money for such services is separated from that for the other types of goods and services can replicate the resource allocation in a one-money system with a fair insurance. For this result, it is necessary to prohibit old generations from exchanging different types of fiat monies in the two-money system. The model implies that the introduction of fiat money for elderly care reduces the real value of government bonds outstanding in the country.
    Date: 2019–06
  7. By: Christopher J. Ruhm
    Abstract: This essay reviews Deaths of Despair and the Future of Capitalism (DEATHS), by Anne Case and Angus Deaton, a fascinating account of life and death in the United States during the late 20th and early 21st centuries. While primarily targeted towards a popular audience, the volume will be of interest to many economists and other social scientists. It postulates how public and private policies currently practiced in the United States, combined with and partly causing the declining economic and social circumstances of less educated, have led to increased mortality from drugs, suicide, and chronic liver disease. After describing the material in DEATHS in considerable detail, I suggest a variety of research questions that need to be answered to confirm or refute Case and Deaton’s arguments and describe challenges to their key hypotheses. Among the latter are the ability of the postulated relationships to explain the sharply differing mortality trajectories of non-Hispanic whites, compared with other groups, and the timing of the observed mortality changes. Along the way, I raise doubts about the usefulness of the “deaths of despair” conceptualization, with its strong implications about causality.
    JEL: I12 I14 I18 J11 J18
    Date: 2021–01
  8. By: Le Bris, David
    Abstract: This paper links economic development to age-old family characteristics through the propensity to invest and thus increase human productivity. Inequality among siblings favors investment in physical capital, while a high status of women and strong parental authority favor investment in human capital. To test this theory, a family score is built according to the presence of these three characteristics in the traditional family type of each country. This family score as well as basic family characteristics are significantly associated with better economic outcomes (GDP per capita as well as proxies for investment in human and physical capital). These relationships are robust to other factors already identified as playing a role, such as geography, ethnic fractionalization, genetic diversity, religion, and formal institutions. Reverse causality is rejected by both historical anthropology and an instrumental investigation.
    Keywords: Economic development, Family model, Cultural Economics, Reversal of fortune
    JEL: N10 N30 N50 O10 O50 Z10
    Date: 2020–01
  9. By: Francesca G Caselli; Francesco Grigoli; Damiano Sandri; Antonio Spilimbergo
    Abstract: Lockdowns and voluntary social distancing led to significant reduction in people’s mobility. Yet, there is scant evidence on the heterogeneous effects across segments of the population. Using unique mobility indicators based on anonymized and aggregate data provided by Vodafone for Italy, Portugal, and Spain, we find that lockdowns had a larger impact on the mobility of women and younger cohorts. Younger people also experienced a sharper drop in mobility in response to rising COVID-19 infections. Our findings, which are consistent across estimation methods and robust to a variety of tests, warn about a possible widening of gender and inter-generational inequality and provide important inputs for the formulation of targeted policies.
    Keywords: Women;Aging;Gender;COVID-19 ;Education;lockdown,mobility,age.,WP,lockdown measure,lockdown stringency,impact of lockdown,lockdown impulse,government lockdown,lockdowns center
    Date: 2020–12–11
  10. By: Antonin Pottier (Centre International de Recherche sur l'Environnement et le Développement - CIRED, EHESS); Marc Fleurbaey (Paris School of Economics; Centre International de Recherche sur l'Environnement et le Développement - CIRED); Stéphane Zuber (Paris School of Economics, Centre d'Economie de la Sorbonne)
    Abstract: We develop an integrated assessment model with endogenous population dynamics accouting for the impact of global climate change on mortality through five channels (heat, diarrhoeal disease, malaria, dengue, undernutrition). An age-dependent endogenous mortality rate, which depends linearly on global temperature increase, is introduced and calibrated. We consider three emission scenarios (business-as-usual, 3°C and 2°C scenarios) and find that the five risks induce deaths in the range from 160,000 per annum (in the near term) to almost 350,000 (at the end of the century) in the business-as-annual. We examine the number of life-years lost due to the five selected risks and find figures ranging from 5 to 10 millions annually. These numbers are too low to impact the aggregate dynamics and we do not find significant feedback effects of climate mortality to production, and thus emissions and temperature increase. But we do find interesting evolution patterns. The number of life-years lost is constant (business-as-usual) or decreases over time (3°C and 2°C). For the stabilisation scenarios, we find that the number of life-years lost is higher today than in 2100, due to improvements in generic mortality conditions, the bias of those improvements towards the young, and an ageing population. From that perspective, the present generation is found to bear the brunt of the considered climate change impacts
    Keywords: Climate change; Impacts; Integrated assessment model; Mortality risk; Endogenous population
    JEL: Q51 Q54 J11
    Date: 2020–11

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