nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒06‒21
thirteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Marco teórico seguridad social y pensiones By Villalobos López, José Antonio
  2. Gender Wage and Longevity Gaps and the Design of Retirement Systems By Francesca Barigozzi; Helmuth Cremer; Jean-Marie Lozachmeur
  3. Delay the Pension Age or Adjust the Pension Benefit? Implications for Labor Supply and Individual Welfare in China By Yuanyuan Deng; Hanming Fang; Katja Hanewald; Shang Wu
  4. Medición de la dependencia en Uruguay. Contexto y estimación de la prevalencia By Maira Colacce; Julia Córdoba; Alejandra Marroig; Guillermo Sánchez-Laguardia
  5. Long-Term Care Facilities as a Risk Factor for Death Due to COVID-19: Evidence from European Countries and U.S. States By Feldman, Michal; Gandal, Neil; Pauzner, Ady; Tabbach, Avraham; Yonas, Matan
  6. CEO Stress, Aging, and Death By Borgschulte, Mark; Guenzel, Marius; Liu, Canyao; Malmendier, Ulrike M.
  7. Aging and the Real Interest Rate in Japan: A Labor Market Channel By Shigeru Fujita; Ippei Fujiwara
  8. Opportunity costs of unpaid caregiving: Evidence from panel time diaries By Ray Miller; Ashish Kumar Sedai
  9. RELATED CARE FOR THE ELDERLY IN A LONG-TERM CARE SYSTEM By Tsatsura Elena; Grishina Elena; Salmina Alla
  10. Demographics and the Evolution of Global Imbalances By Michael Sposi
  11. The glittering prizes: career incentives and bureaucrat performance By Bertrand, Marianne; Burgess, Robin; Chawla, Arunish; Xu, Guo
  12. Optimal Claiming of Social Security Benefits By Steven Diamond; Stephen Boyd; David Greenberg; Mykel Kochenderfer; Andrew Ang
  13. Trends and inequality in the new active ageing and well-being index of the oldest old: a case study of Sweden By Fritzell, Johan; Lennartsson, Carin; Zaidi, Asghar

  1. By: Villalobos López, José Antonio
    Abstract: Pensions should not be seen as an expense, but as a social investment, which benefits those who have made the most work effort during their productive life. The entire constitutional basis of social security is found in article 123 of Magna Carta, which is why it is said that the main legal framework of social security in our country could be fragile and vague. The fundamental difference between pension and retirement is that the former will not receive the benefit of the employer directly, but through a common fund or mass that he accumulated during his working life, while the second implies that the person who delivers the benefit will be the employer to whom he served during his productive life. As theoretical concepts there are two major pension systems or schemes: defined profit and defined contribution. The defined benefit system states that workers' resources will accumulate in a common fund. In the defined contribution system or individual capitalization each affiliate has an account, where their quotes are deposited that are capitalized.
    Keywords: Social Security, Pension, Retirement, Defined Benefit and Defined Contribution
    JEL: H55
    Date: 2021–06–01
  2. By: Francesca Barigozzi; Helmuth Cremer; Jean-Marie Lozachmeur
    Abstract: We study the design of pension benefits for male and female workers. Women live longer than men but have a lower wage. Individuals can be single or live in couples who pool their incomes. Social welfare is utilitarian but an increasing concave transformation of individuals’ lifetime utilities introduces the concern for redistribution between individuals with different life-spans. We derive the optimal direction of redistribution and show how it is affected by a gender neutrality rule. With singles only, a simple utilitarian solution implies redistribution from males to females. When the transformation is sufficiently concave redistribution may or may not be reversed. With couples only, the ranking of gender retirement ages is always reversed when the transformation is sufficiently concave. Under gender neutrality pension schemes must be self-selecting. With singles only this implies distortions of retirement decision and restricts redistribution across genders. With couples, a first best that implies a lower retirement age for females can be implemented by a gender-neutral system. Otherwise, gender neutrality implies equal retirement ages and restricts the possibility to compensate the shorter-lived individuals. Calibrated simulations show that when singles and couples coexist, gender neutrality substantially limits redistribution in favor of single women and fully prevents redistribution in favor of male spouses.
    Keywords: gender wage gap, gender gap in longevity, retirement systems
    JEL: H55 H31 H21
    Date: 2021
  3. By: Yuanyuan Deng; Hanming Fang; Katja Hanewald; Shang Wu
    Abstract: We develop and calibrate a life-cycle model of labor supply and consumption to quantify the implications of alternative pension reforms on labor supply, individual welfare, and government budget for China’s basic old-age insurance program. We focus on urban males and distinguish low-skilled and high-skilled individuals, who differ in their preferences, health and labor income dynamics, and medical expense processes. We use the calibrated model to evaluate three potential pension reforms: (i) increasing the pension eligibility age from 60 to 65, but keeping the current pension benefit rule unchanged; (ii) keeping the pension eligibility age at 60, but proportionally lowering pension benefits so that the pension program’s budget is the same as under Reform (i); and (iii) increasing the pension eligibility age to 65 and simultaneously increasing the pension benefits so that individuals of both skill types attain the same individual welfare levels as in the status quo. We find that relative to the baseline, both Reforms (i) and (ii) can substantially improve the budgets of the pension system, but at the cost of substantial individual welfare loss for both skill types. In contrast, we find that Reform (iii) can modestly improve the budget of the pension system while ensuring that both skill types are as well off as in the status quo. We find that Reforms (i) and (ii) slightly increases, but Reform (iii) slightly decreases, the overall labor supply.
    JEL: D14 D15 H55 J22
    Date: 2021–06
  4. By: Maira Colacce (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Julia Córdoba (Universidad de la República (Uruguay). Facultad de Psicología. Programa de Discapacidad y Calidad de Vida); Alejandra Marroig (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Guillermo Sánchez-Laguardia (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: The interest in the care of dependent people has gained space in recent years at the national, regional and international levels. It has also gained space in the academic and public policy arenas. However, not enough progress has yet been made in improving the availability of clear and precise information on the prevalence of dependency in the population, especially among the elderly and people with disabilities.This study seeks to estimate the prevalence of dependency in elderly or disabled people in Uruguay and to relate these results to the prevalence of dependency in other developing and developed countries. Using the data from the two waves of the Longitudinal Survey of Social Protection (2013 and 2015), the prevalence of dependency ranges between 5 and 17% of people aged 60 years and over, depending on the indicator used. All the indicators show that dependency increases with age and that it becomes especially prevalent among people aged 85 and over. The prevalence among people under 60 years of age in 2015 is clearly lower than that observed for older people, being below 6% in all cases. The results presented in this document suggest that the prevalence of dependence estimated in the second round of LSPS is similar to that estimated for other countries, while the prevalence observed in the first wave is exceptionally low.
    Keywords: Dependency, Aging, LSPS, Uruguay
    JEL: I10 C89
    Date: 2021–02
  5. By: Feldman, Michal; Gandal, Neil; Pauzner, Ady; Tabbach, Avraham; Yonas, Matan
    Abstract: A large percentage of the deaths from COVID-19 occur among residents of long-term care facilities. There are two possible reasons for this phenomenon. First, the structural features of such settings may lead to death. Alternatively, it is possible that individuals in these facilities are in poorer health than those living elsewhere, and that these individuals would have died even if they had not been in these facilities. Our findings show that, controlling for the population density and the percentage of older adults in the population, there is a significant positive association between the number of long-term care beds per capita and COVID-19 mortality rates. This finding provides support for the claim that long-term care living arrangements (of older people) are a significant risk factor for dying from COVID-19.
    Keywords: Death Due to COVID-19; Empirical Work; Long-Term Care Facilities
    Date: 2020–06
  6. By: Borgschulte, Mark; Guenzel, Marius; Liu, Canyao; Malmendier, Ulrike M.
    Abstract: We show that increased job demands due to takeover threats and industry crises have significant adverse consequences for managers' long-term health. Using hand-collected data on the dates of birth and death for more than 1,600 CEOs of large, publicly listed U.S. firms, we estimate that CEOs' lifespan increases by around two years when insulated from market discipline via anti-takeover laws. CEOs also stay on the job longer, with no evidence of a compensating differential in the form of lower pay. In a second analysis, we find diminished longevity arising from increases in job demands caused by industry-wide downturns during a CEO's tenure. Finally, we utilize machine-learning age-estimation methods to detect visible signs of aging in pictures of CEOs. We estimate that exposure to a distress shock during the Great Recession increases CEOs' apparent age by roughly one year over the next decade.
    Date: 2020–06
  7. By: Shigeru Fujita; Ippei Fujiwara
    Abstract: This paper explores a causal link between aging of the labor force and declining trends in the real interest rate in Japan. We develop a search/matching model that features heterogeneous workers with respect to their ages and firm-specific skills. Using the model, we examine the long-run implications of the sharp drop in labor force entry in the 1970s. We show that the changes in the demographic structure induce significant low-frequency movements in per capita consumption growth and the real interest rate. The model suggests that aging of the labor force accounts for 40 percent or more of the declines in the real interest rate observed between the 1980s and 2000s in Japan. We also examine the impacts of other long-term developments such as a slowdown of TFP growth and higher shares of female and non-regular workers.
    Keywords: Aging; Real interest rate; Japan
    JEL: E24 E43
    Date: 2021–06–08
  8. By: Ray Miller; Ashish Kumar Sedai
    Abstract: We examine the association between unpaid caregiving by older Americans and time allocated to labor supply, home production, leisure, and personal care. After controlling for time-invariant heterogeneity using panel time diaries, we find that older caregivers reported reduced time allocated to each domain fairly evenly overall. However, women showed a stronger associated decline in personal care and labor supply while men showed stronger declines in time devoted to home production. Gendered differences are more pronounced with intensive and non-spousal care. Results highlight time-cost differentials that could be driving observed gender gaps in health and labor market outcomes among unpaid caregivers. The study also underscores the serious endogeneity concerns between caregiving and broader time allocation patterns and highlights the need for additional research.
    Keywords: unpaid care, time-use, aging, gender inequality, home production, personal care
    Date: 2021–04
  9. By: Tsatsura Elena (Russian Presidential Academy of National Economy and Public Administration); Grishina Elena (Russian Presidential Academy of National Economy and Public Administration); Salmina Alla (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: This paper presents the results of an analysis of in-depth interviews with people caring for their elderly relatives.
    Keywords: caring for elderly relatives, analysis of in-depth interviews
    Date: 2021–01
  10. By: Michael Sposi (Southern Methodist University)
    Abstract: The age distribution evolves asymmetrically across countries, influencing capital flows through differences in aggregate saving rates and labor supply. I build a general equilibrium model featuring overlapping generations and international trade where dynamics are driven by capital accumulation and borrowing and lending. The equilibrium can be replicated by a model in which every country is inhabited by a representative household that experiences an endogenous, time-varying discount factor reflecting the co-evolution of the entire age distribution and relevant prices. This equivalence affords computation of the exact transitional dynamics. I calibrate the model to match national accounts and bilateral trade data and quantify how demographic forces affected capital flows between 28 countries since 1970. On average, increasing a country's mean age by one year boosts its current account by 0.4 percent of GDP. Observed bilateral trade patterns dictate the cross-country dispersion and magnitude of capital flows in response to changes in any individual country's demographics.
    Keywords: Demographics; Global imbalances; Dynamics; International trade
    JEL: F11 F21 J11
    Date: 2021–03
  11. By: Bertrand, Marianne; Burgess, Robin; Chawla, Arunish; Xu, Guo
    Abstract: Bureaucracies are configured differently to private sector and political organizations. Across a wide range of civil services entry is competitive, promotion is constrained by seniority, jobs are for life and retirement occurs at a fixed age. This implies that older entering officers, who are less likely to attain the glittering prize of reaching the top of the bureaucracy before they retire, may be less motivated to exert effort. Using a nationwide stakeholder survey and rich administrative data on elite civil servants in India we provide evidence that: (i) officers who cannot reach the senior-most positions before they retire are perceived to be less effective and are more likely to be suspended and (ii) this effect is weakened by a reform that extends the retirement age. Together these results suggest that the career incentive of reaching the top of a public organization is a powerful determinant of bureaucrat performance.
    JEL: D73 H11 O10
    Date: 2020–03–01
  12. By: Steven Diamond; Stephen Boyd; David Greenberg; Mykel Kochenderfer; Andrew Ang
    Abstract: Using a lifecycle framework with Epstein-Zin (1989) utility and a mixed-integer optimization approach, we compute the optimal age to claim Social Security benefits. Taking advantage of homogeneity, a sufficient statistic is the ratio of wealth to the primary insurance amount (PIA). If the investor's wealth to PIA ratio exceeds a certain threshold, individuals should defer Social Security for at least a year. The optimal threshold depends on mortality assumptions and an individual's utility preferences, but is less sensitive to capital market assumptions. The threshold wealth to PIA ratio increases from 5.5 for men and 5.2 for women at age 62 to 11.1 for men and 10.4 for women at age 69. Below the threshold wealth to PIA ratio, individuals claim Social Security to raise consumption. Above this level, investors can afford to fund consumption out of wealth for at least one year, and then claim a higher benefit.
    Date: 2021–05
  13. By: Fritzell, Johan; Lennartsson, Carin; Zaidi, Asghar
    Abstract: The policy discourse on active ageing and well-being at the European level tends to have a strong focus on the experiences of the ‘young old’. In this study the focus instead is on the oldest old (75 years and older). The theoretical framework is inspired by the Active Ageing Index and the Nordic welfare research tradition. Active ageing and well-being indicators and domains of high relevance for the oldest old are used and a new Active Ageing-Well Being Index (AA-WB Index) is developed. Our aim is to go beyond averages and analyse changes over time and inequality in the AA-WB Index. The prime data is derived from two waves, 2004 and 2014, of the Swedish Panel Study of Living Conditions of the Oldest Old (SWEOLD), a nationally representative sample of older people. The results show an overall improvement in most domains of the AA-WB index, especially in the indicator participation in cultural and leisure activities. The findings also show clear and consistent gender and educational inequalities. In addition, the different domains correlate, implying that inequality within a domain is aggravated by the inequality in another domain. The study highlights that measurements on active ageing and well-being should place a greater importance on the living conditions of the oldest old with a special focus on inequality.
    Keywords: active ageing; inequality; multidimensionality; oldest old; wellbeing; 2018- 01922; 2016-07206
    JEL: N0
    Date: 2021

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