nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒07‒12
seventeen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Impact of Population Aging on the German Statutory Pension Insurance - A Probabilistic Approach By Vanella, Patrizio; Rodriguez Gonzalez, Miguel; Wilke, Christina B.
  2. Pension Incentives and Labor Supply: Evidence from the Introduction of Universal Old-Age Assistance in the UK By Giesecke, Matthias; Jaeger, Philipp
  3. Intergenerational risk sharing in a collective defined contribution pension system: a simulation study with Bayesian optimization By An Chen; Motonobu Kanagawa; Fangyuan Zhang
  4. Incentives, Health, and Retirement: Evidence from a Finnish Pension Reform By Ollonqvist, Joonas; Kotakorpi, Kaisa; Laaksonen, Mikko; Martikainen, Pekka; Pirttilä, Jukka; Tarkiainen, Lasse
  5. Informality and pension reforms in Bolivia: The case of Renta Dignida By Carla Canelas; Miguel Niño-Zarazúa
  6. Wealth Concentration in the United States Using an Expanded Measure of Net Worth By Alice Henriques Volz; Lindsay Jacobs; Elizabeth Llanes; Kevin B. Moore; Jeffrey P. Thompson
  7. Nursing Homes in Equilibrium: Implications for Long-term Care Policies By Tatyana Koreshkova; Minjoon Lee
  8. Life Expectancy and Income Levels in Chile By Gonzalo Edwards; Raimundo Soto; Felipe Zurita
  9. Intergenerational wealth transmission in Great Britain By Gregg, Paul; Kanabar, Ricky
  10. The Risk of High Out-of-Pocket Health Spending among Older Americans By Helen Levy
  11. Recent Trends in Disability and the Implications for Use of Disability Insurance By Timothy A. Waidmann; HwaJung Choi; Robert F. Schoeni; John Bound
  12. Human resource practices, perceived employability and turnover intention: does age matter? By Ludivine Martin; Uyen T. Nguyen-Thi; Caroline Mothe
  13. An assessment on the potential impact of COVID-19 on the Italian demographic structure By Giacomo Caracciolo; Salvatore Lo Bello; Dario Pellegrino
  14. Monetary Policy Shocks and the Employment of Young, Middle-Aged, and Old Workers By Fumitaka Nakamura; Nao Sudo; Yu Sugisaki
  15. LA ARQUITECTURA DE ELECCIÓN MEJORA LA SELECCIÓN DE PENSIONES By Raymond Duch; Paulina Granados; Denise Laroze; Mauricio Lopez; Marian Ormeño; Ximena Quintanilla
  16. Gender and age diversity. Does it matter for firms’ productivity? By Laetitia Challe; Fabrice Gilles; Yannick L'Horty; Ferhat Mihoubi
  17. Millennial Travelers Are More Multimodal than Older Travelers, but This Trend Might Change as They Age By Lee, Yongsung; Mokhtarian, Patricia L.; Guhathakurta, Subhrajit; Circella, Giovanni; Iogansen, Xiatian

  1. By: Vanella, Patrizio; Rodriguez Gonzalez, Miguel; Wilke, Christina B.
    Abstract: The demographic transition is a phenomenon affecting many industrialized societies. These economies are experiencing a decline in mortality alongside low fertility rates – a situation that puts social security systems under severe pressure. To implement appropriate reform measures, adequate forecasts of the future population structure, specifically in pay-as-you-go systems are needed. We propose a probabilistic approach to forecast the numbers of pensioners in Germany up to 2040, considering trends in population development, labor force participation and early retirement as well as the effects of further pension reforms. A principal component analysis is used for dimensionality reduction and consideration of cross-correlational effects between ageand sex-specific pension rates for both old-age and disability pensions. Time series methods enable the inclusion of autocorrelation effects in the model and the simulation of future uncertainty. The model predicts that, in the median, the numbers of old-age pensioners will increase by almost 5 million individuals from 2017 to 2036, alongside increases in disability pensions by 2036, given the raising of the legal retirement ages following the introduced regulations. After that point, a moderate decrease can be expected. The results show a clear need for further reforms, if the German statutory pension system is to be sustainable in the long run.
    Keywords: Population Aging; Stochastic Forecasting; Principal Component Analysis; Time Series Analysis; Applied Econometrics; Public Pension Systems; Social Policy
    JEL: C53 H55 J11
    Date: 2021–07
  2. By: Giesecke, Matthias (RWI); Jaeger, Philipp (RWI)
    Abstract: We study the labor supply implications of the Old-Age Pension Act (OPA) of 1908, which, for the first time, provided pensions to older people in the UK. Using recently released census data covering the entire population, we exploit variation at the newly created age-based eligibility threshold. Our results show a considerable and abrupt decline in labor force participation of 6.0 percentage points (13%) when older workers reach the eligibility age of 70. To mitigate the impact of population aging today, pension reforms aimed at increasing elderly labor supply, however, have to induce much larger behavioral responses than the OPA.
    Keywords: old-age assistance, labor supply, retirement, regression discontinuity design, equity-efficiency trade-off
    JEL: D61 H21 H55 J14 J22 J26
    Date: 2021–06
  3. By: An Chen; Motonobu Kanagawa; Fangyuan Zhang
    Abstract: Pension reform is a crucial societal problem in many countries, and traditional pension schemes, such as Pay-As-You-Go and Defined-Benefit schemes, are being replaced by more sustainable ones. One challenge for a public pension system is the management of a systematic risk that affects all individuals in one generation (e.g., that caused by a worse economic situation). Such a risk cannot be diversified within one generation, but may be reduced by sharing with other (younger and/or older) generations, i.e., by intergenerational risk sharing (IRS). In this work, we investigate IRS in a Collective Defined-Contribution (CDC) pension system. We consider a CDC pension model with overlapping multiple generations, in which a funding-ratio-liked declaration rate is used as a means of IRS. We perform an extensive simulation study to investigate the mechanism of IRS. One of our main findings is that the IRS works particularly effectively for protecting pension participants in the worst scenarios of a tough financial market. Apart from these economic contributions, we make a simulation-methodological contribution for pension studies by employing Bayesian optimization, a modern machine learning approach to black-box optimization, in systematically searching for optimal parameters in our pension model.
    Date: 2021–06
  4. By: Ollonqvist, Joonas; Kotakorpi, Kaisa; Laaksonen, Mikko; Martikainen, Pekka; Pirttilä, Jukka; Tarkiainen, Lasse
    Abstract: We analyse the effects of changes in retirement incentives on retirement behaviour, and in particular whether individuals' health status modifes the effects of retirement incentives. We study these issues in the context of the Finnish pension reform of 2005, utilising detailed individual-level administrative data on health and retirement behaviour. Our results indicate that changes in economic incentives matter for retirement behaviour. Many types of individuals react to retirement incentives, and the reaction to economic incentives does not appear to vary according to the individuals' health status in a systematic way. Hence there does not seem to be a trade-off between providing incentives to postpone retirement and equal treatment of individuals with different health status.
    Keywords: pension reform, retirement incentives, health, Social security, taxation and inequality, H55, J26,
    Date: 2021
  5. By: Carla Canelas; Miguel Niño-Zarazúa
    Abstract: How social protection programmes affect work choices is a question that has been at the centre of labour economics research for decades. More recently, a scant literature has focused on the effects of social protection on work choices and informal employment in the context of low- and middle-income countries. This paper contributes to this scant literature by examining the effect of Bolivia's Renta Dignidad , a universal non-contributory old-age pension that covers all Bolivians aged 60 years and older.
    Keywords: Social protection, Informal work, Bolivia, Non-contributory pensions, Social pensions
    Date: 2021
  6. By: Alice Henriques Volz; Lindsay Jacobs; Elizabeth Llanes; Kevin B. Moore; Jeffrey P. Thompson
    Abstract: Defined benefit (DB) pensions and Social Security are two important resources for financing retirement in the United States. However, these illiquid, non-market forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This paper develops an alternative, expanded wealth concept, augmenting precise net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security wealth. We use this expanded wealth concept to explore the concentration of wealth among households aged 40 to 59 and find that (1) including DB pension and Social Security results in markedly lower measures of wealth concentration and that (2) trends toward higher wealth inequality over time, while moderated, are still present.
    Keywords: wealth concentration; saving; Social Security; pensions
    JEL: D14 D31 D63 G51 I31 J15
    Date: 2021–04–01
  7. By: Tatyana Koreshkova (Concordia University); Minjoon Lee (Carleton University)
    Abstract: We build an equilibrium model of the market for nursing home care with decision-makers on both sides of the market. The nursing home demand arises as a result of stochastic dynamic optimizations by households heterogeneous in age, health, wealth; and the cost of home-and-community-based care. On the supply side, locally competitive nursing homes decide prices and care intensity. The government pays for the long-term care of the poorest. We estimate the model parameters using Health and Retirement Survey and simulate the model to quantitatively evaluate the effects of long-term care policies on prices, intensities, care allocation, and welfare.
    Date: 2020–09
  8. By: Gonzalo Edwards; Raimundo Soto; Felipe Zurita
    Abstract: We document that life expectancies at the age of retirement differ significantly by income levels and gender in Chile. Using a sample of over 500 thousand workers that retired under the annuity system, we find that, conditional on reaching retirement age, there is a three-year difference in life expectancy between the lower and higher income groups. Differences are similar for men and women. We also find that as income per capita in Chile expanded over the past three decades, poverty levels have decreased quite markedly among pensioners. The evidence on income distribution is less clear cut. While income inequality is lower for the new generations, it increases after retirement within each generation as the poor die younger than the rich workers. Gender differences are also noteworthy. First, income among women is less unequal than that of men at retirement age and afterwards. Second, income inequality among retired men progressively worsens over time, while among women it remains stagnant over time. Our results have important implications for welfare projections, the allocation of health subsidies among pensioners, and the structure and management of the reserves required to life-insurance companies.
    Date: 2020
  9. By: Gregg, Paul; Kanabar, Ricky
    Abstract: We document the intergenerational persistence of wealth between adult offspring and their parents using the Wealth and Assets Survey for Great Britain. We estimate an intergenerational wealth elasticity of 0.4 and rank-rank elasticity of 0.3 and find wealth persistence for individuals in their 60s is lower than for those currently aged in their 30s and early 40s, though rank based estimates are stable. We estimate that the intergenerational wealth elasticity is 3.8 percentage points higher when comparing people with those the same age six years previously suggesting strong evidence of higher intergenerational wealth persistence in younger age cohorts.
    Date: 2021–07–01
  10. By: Helen Levy (University of Michigan and NBER)
    Abstract: Traditional Medicare imposes significant cost-sharing on beneficiaries. Most but not all beneficiaries obtain supplemental insurance through Medigap, Medicare Advantage, Medicaid, or employer-sponsored retiree coverage, which may vary in how well they protect against the risk of high spending. This paper uses data from the Health and Retirement Study for the years 2002 through 2016 to document how supplemental coverage for Medicare beneficiaries 65 and older has changed over time, and to estimate the distribution of out-of-pocket spending for enrollees with different coverage types. I find that the shares of beneficiaries with employer-sponsored supplemental coverage or Medigap declined between 2002 and 2016, whereas the shares with Medicare Advantage or no supplemental coverage for doctor and hospital bills have increased. The majority of those with no supplemental coverage for doctor and hospital bills have Medicare Part D, which covers prescription drug expenses. I find that all supplemental coverage types are associated with lower observed dispersion in out-of-pocket medical care spending, measuring dispersion as the ratio of the 90th to the 50th percentile or the standard deviation. All supplemental insurance types are associated with a lower probability that out-of-pocket medical care spending exceeds 10% of household income, while all but Medicaid are associated with a significantly higher probability that total out-of-pocket health spending (that is, medical care plus health insurance premiums) exceeds this threshold. Thus, all supplemental insurance forms effectively function as insurance, translating uncertain medical costs into more predictable — although still potentially burdensome — premiums.
    Date: 2020–09
  11. By: Timothy A. Waidmann (Urban Institute); HwaJung Choi (University of Michigan); Robert F. Schoeni (University of Michigan); John Bound (University of Michigan)
    Abstract: The health of the working-aged population is a key driver of enrollment in and spending by the two most important federal disability programs, Social Security Disability Insurance (DI) and Supplemental Security Income (SSI). Recent studies have found that some dimensions of the population’s health approaching retirement age have worsened relative to earlier cohorts. Other things equal, these unfavorable health trends would be expected to cause both applications and disability awards to increase and portend fiscal challenges for DI and SSI. Using two nationally representative surveys, this study examines the health trends of adults ages 51 to 61 between the mid-1990s and the mid-2010s and finds updated evidence confirming prior conclusions of unfavorable trends. It then summarizes the likely effect of these unfavorable health trends on the demand for DI and SSI benefits by simulating the effect on applications and awards of observed health changes over time while holding constant other factors likely to affect DI/SSI use. These estimated effects suggest an increase in demand for disability benefits due to worsening health of 9 to 16% for men over the 20-year period depending on the age group and survey. Estimated effects of health trends on DI/SSI for women were not significant. If these trends for men continue, they may require adjustments in planning for the future of important social insurance programs.
    Date: 2019–10
  12. By: Ludivine Martin (LISER - Luxembourg Institute of Socio-Economic Research, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Uyen T. Nguyen-Thi (LISER - Luxembourg Institute of Socio-Economic Research); Caroline Mothe (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: This paper investigates the age specificities in the link between employee's perceived external employability and turnover intention and how the use of human resource practices moderates this relationship. Results show that the use of motivation-enhancing HR practices induces a larger retention effect for younger and middle-aged employees than for older ones, whereas the turnover intention effects of flexibility-enhancing HR practices are stronger for the middle-age and older groups than for the younger groups. Moreover, the use of HR practices that stimulate employees' motivation, such as training, participation, voice and teamwork, plays a stronger role in retaining highly employable younger employees, while the use of HR practices that offer flexibility, such as flexible working time, teleworking and work-life balance, enables retaining highly employable older employees.
    Keywords: Turnover intention,perceived external employability,human resource practices,age
    Date: 2021
  13. By: Giacomo Caracciolo (Bank of Italy); Salvatore Lo Bello (Bank of Italy); Dario Pellegrino (Bank of Italy)
    Abstract: Relative to past pandemics, the mortality effects of Covid-19 on the demographic structure are likely smaller. However, the behavioural effects of the economic crisis on the decisions to have children and to migrate may be substantial. The literature on the relationship between the economic cycle and demographics uncovers the potential of the unemployment rate to predict fertility and migrations. Based on this evidence, we estimate the elasticity of the number of births per woman of child-bearing age and of the net migration rate to the unemployment rate in Italy, considering the 1980-2019 period. Accordingly, we forecast the impact of the pandemic on the birth rate and on migration flows in 2020-23, and we build alternative scenarios for the following years (2024-2065). Lastly, we examine the consequences of the same phenomena on the demographic structure and on GDP and on GDP per capita. Given the scenarios outlined in our work and in the absence of effective policies to support economic growth, the crisis may exacerbate the process of population ageing indicated by Istat projections, with significant repercussions for output.
    Keywords: demographic trends, macroeconomic effects, and forecasts, fertility, family planning, economic history (demography, comparative), population ageing.
    JEL: J11 J13 N30
    Date: 2021–06
  14. By: Fumitaka Nakamura (Director and Senior Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail:; Nao Sudo (Director and Senior Economist, Institute for Monetary and Economic Studies (currently, Head of Financial System Research Division, Financial System and Bank Examination Department), Bank of Japan (E-mail:; Yu Sugisaki (Economist, Institute for Monetary and Economic Studies (currently, Research and Statistics Department), Bank of Japan (E-mail:
    Abstract: We study how monetary policy affects the labor status of people of different ages and genders using Japanese data from the late 1990s to the late 2010s, with monetary policy shocks identified using high frequency market data. We first show that expansionary monetary policy shocks reduce the unemployment rate of all ages in both genders by almost the same amount. We then show that the impacts of these shocks are starkly different across ages in terms of changes in the labor force and number of employed. Expansionary monetary policy shocks cause the non- labor force of young and elderly people to join the labor force, leading to an increase in the number of employed of these age groups, leaving the middle-aged less affected. Our findings are consistent with the view that changes in the labor force participation rate play a role in determining the degree of labor market slack for specific ages.
    Keywords: Monetary policy, Age structure, Labor market slack, Wage Phillips curve, High frequency identification
    JEL: E24 E32 E52
    Date: 2021–06
  15. By: Raymond Duch; Paulina Granados; Denise Laroze; Mauricio Lopez; Marian Ormeño; Ximena Quintanilla (Studies Division, Chilean Pension Supervisor)
    Abstract: Los afiliados al sistema de pensiones privado en Chile que optan por pensionarse no seleccionan la mejor oferta de pensión (“el mejor valor presente neto”) ofrecida por los proveedores disponibles (FNE 2018). Los reguladores presentan a los solicitantes de pensión un informe comparativo de las ofertas de pensión ordenadas descendentemente según monto ofrecido, presentando también la clasificación de riesgo del proveedor respectivo. Un experimento de campo implementado en Chile explora presentaciones alternativas del desempeño del proveedor. Se realizan distintos “tratamientos” donde se modifica la presentación del informe comparativo respecto del vigente al momento del experimento. Dos opciones de diseño claramente mejoraron el bienestar del consumidor en este experimento. Primero, la reducción de la cantidad de información mejoró la elección, específicamente dejando en un segundo plano la clasificación de riesgo de los proveedores, lo que llevó a mejores decisiones por parte de los sujetos experimentales. En segundo lugar, la adopción de un marco de pérdidas también dio como resultado que los sujetos experimentales seleccionasen proveedores que generaban mayores retornos. Las ganancias al modificar la presentación de la información fueron considerablemente mayores para aquellos individuos con niveles de alfabetización financiera más baja. Este estudio se llevó a cabo en asociación con la Superintendencia de Pensiones (SP) y la Comisión para el Mercado Financiero (CMF), dos de las instituciones públicas que supervisan el mercado de pensiones en Chile.
    Keywords: Sistema de Pensiones de contribución definida
    Date: 2021–01
  16. By: Laetitia Challe; Fabrice Gilles; Yannick L'Horty; Ferhat Mihoubi
    Date: 2021
  17. By: Lee, Yongsung; Mokhtarian, Patricia L.; Guhathakurta, Subhrajit; Circella, Giovanni; Iogansen, Xiatian
    Abstract: Millennials, those who were born between the early 1980s and the late 1990s, tend to have different travel patterns than the members of the preceding generations when they were at the same age. Among various dimensions of millennial travel, multimodality—the use of multiple travel modes— has important implications for transportation sustainability. Prior research has found that members of this generation travel more by walking, bicycling, and riding public transit. Further, multimodal travelers are usually better informed about and more sensitive to level-of-service attributes of various modes than are habitual users of single modes (especially cars). Therefore, exploring trends in multimodality among millennials could inform policymakers’ efforts to encourage more sustainable travel modes for millennials and shed light on how they might respond to policy interventions. Researchers at the University of California, Davis, compared millennials’ travel behavior to that of members of the preceding Generation X by analyzing data collected from 1,069 California commuters. The researchers analyzed the effects of individual attributes on the likelihood of different components of travel behavior, including multimodal travel. This policy brief summarizes the findings of that research and provides policy implications. View the NCST Project Webpage
    Keywords: Social and Behavioral Sciences, Automobile ownership, Mode choice, Residential location, Statistical analysis, Surveys, Travel behavior, Travel patterns, Vehicle miles of travel, Young adult
    Date: 2021–07–01

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