nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒09‒13
twelve papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pension Expectations and Household Portfolio Choice of the Elderly in Japan By Okumura, Tsunao; Usui, Emiko
  2. Early Retirement Provision for Elderly Displaced Workers By Kruse, Herman; Myhre, Andreas
  3. Optimizing the life cycle path of pension premium payments and the pension ambition in the Netherlands By Harry ter Rele; Carolijn de Kok; Nicoleta Ciurila; Peter Zwaneveld
  4. Deviations From Standard Family Histories and Subjective Wellbeing at Older Ages By Bruno Arpino; Jordi GumÃ; Albert JuliÃ
  5. Reaping the Rewards Later: How Education Improves Old-Age Cognition in South Africa By Plamen Nikolov; Steve Yeh
  6. Health Literacy Improvement and Use of Digital Health Services in Aged People: A Systematic Literature Review By Zolbin, Maedeh Ghorbanian; Nikou, Shahrokh
  7. Demographic Change and Private Savings in India By Jain, Neha; Goli, Srinivas
  9. Potential demographic dividend for India, 2001 to 2061: A macro-simulation projection using the spectrum model By Jain, Neha; Goli, Srinivas
  10. A Bayesian Cost-effectiveness analysis of Holobalance, Holograms for personalized virtual coaching and motivation in an ageing population with balance disorders By Abreha, Fasika Molla; Salmasi, Luca; Ianuale, Nicola; Pegoraro, Enrico
  11. Inequality in Mortality between Black and White Americans by Age, Place, and Cause, and in Comparison to Europe, 1990-2018 By Hannes Schwandt; Janet Currie; Marlies Bär; James Banks; Paola Bertoli; Aline Bütikofer; Sarah Cattan; Beatrice Zong-Ying Chao; Claudia Costa; Libertad Gonzalez; Veronica Grembi; Kristiina Huttunen; René Karadakic; Lucy Kraftman; Sonya Krutikova; Stefano Lombardi; Peter Redler; Carlos Riumallo-Herl; Ana Rodríguez-González; Kjell Salvanes; Paula Santana; Josselin Thuilliez; Eddy van Doorslaer; Tom Van Ourti; Joachim Winter; Bram Wouterse; Amelie Wuppermann
  12. Demographic Change and Economic Growth in India By Jain, Neha; Goli, Srinivas

  1. By: Okumura, Tsunao; Usui, Emiko
    Abstract: Using the Japanese Study of Aging and Retirement (JSTAR), we examine the determinants of household portfolio choice by the elderly in Japan. Only one-fifth of Japanese elderly hold stocks among their financial assets. Japanese elderly who are more educated, have better mental functions, have higher income, and subjectively expect a greater probability of living until at least age 80 are more likely to hold stocks. Among those who plan to receive public pension benefits in the future, those who expect a greater decline in future public pension benefits have a smaller share of stocks and a larger share of bonds in their portfolio of financial assets, but both are in small quantities. The most important factors affecting the relatively low investment in stocks by Japanese elderly are educational and income differences, rather than their low expectations about their future pension benefits.
    Keywords: Household portfolio choice, subjective expectations, pension benefits
    JEL: I10 H55 D84
    Date: 2021–09
  2. By: Kruse, Herman; Myhre, Andreas
    Abstract: This paper studies the economic effects on re-employment and program substitution behavior among elderly displaced workers who exogenously lose eligibility for their early retirement option. We use detailed Norwegian matched employer-employee data containing information on bankruptcy dates and individual-level wealth, income, pensions and social security benefits. Our empirical strategy employs a regression discontinuity design, as job displacement before a certain age cut-off results in losing eligibility for early retirement benefits between ages 62–67 years in Norway. We find that reemployment rates are indistinguishable between workers who just retain eligibility for early retirement benefits and those who just do not. Meanwhile, those who lose eligibility offset 69% of their lost benefits through take-up of other social security benefits, where 51% comes from disability insurance and 13% from unemployment insurance. Our findings are particularly policy relevant as tightening of age-limits for old-age pensions is on the agenda in several OECD countries, while current economic hardship throughout the region may lead to increased job displacement for elderly workers.
    Keywords: early retirement, job displacement, labor supply, benefit substitution, social security
    JEL: H55 I38 J14 J26 J65
    Date: 2021–06–09
  3. By: Harry ter Rele (CPB Netherlands Bureau for Economic Policy Analysis); Carolijn de Kok; Nicoleta Ciurila (CPB Netherlands Bureau for Economic Policy Analysis); Peter Zwaneveld (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Pension premium rates and pension benefits are independent of age or family situation in the second pillar of the Dutch pension system. In a life cycle model calibrated on Dutch data we investigate the optimal arrangement of pension premiums and benefits taking into consideration two factors: the fact that incomes generally rise with age and the presence of children in the early years of the household. Our analysis points out that due to these factors lifetime welfare can be raised by a delay of pension premium payments towards later working ages. A lower pension ambition further enhances lifetime welfare. Taking these factors into consideration when designing the pension system increases lifetime welfare by an amount that equals a 3.4 percent increase in lifetime consumption if no borrowing constraints are imposed and 2.8 percent if, more realistically, we impose these constraints. Family size (i.e. number of children) has a large impact on optimal pension premiums and optimal pension ambition. Policy conclusions from our results should carefully weigh the calculated welfare gain against possible negative and positive effects of non-modelled aspects.
    JEL: D91 G11 G23
    Date: 2021–04
  4. By: Bruno Arpino (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze); Jordi Gumà (Department of Political and Social Sciences, Pompeu Fabra University); Albert Julià (Department of Sociology, University of Barcelona)
    Abstract: Life course research emphasizes that health and wellbeing at older ages are influenced by experiences occurred in the previous stages of life. Several studies have focused on fertility and partnership histories and health at older ages, but fewer have examined subjective wellbeing (SWB), especially using a holistic approach. Another strand of the literature demonstrated that non-standard family behaviors negatively influence SWB. We contribute to these strands of the literature by examining the association between non-standardness of family histories and SWB at older ages. We argue that individuals who experienced non-standard trajectories have been exposed to social sanctions throughout their life course which could exert negative long-term influence on their SWB. We apply sequence analysis and optimal matching on retrospective data from the seventh wave of the Survey of Health Ageing and Retirement in Europe (SHARE) to calculate the degree of non-standardness of family histories between age 15 and 49. Subseuently, we estimate linear regression models to assess the association between non-standardness of family histories and older people's SWB. Our results show a negative association between non-standardness of family histories and SWB, which is stronger for lower educated individuals and in Southern European countries.
    Keywords: Fertility histories; Partnership histories; subjective wellbeing; older people; SHARE.
    Date: 2021–09
  5. By: Plamen Nikolov (State University of New York (at Binghamton)); Steve Yeh (Columbia University)
    Abstract: Cognitive abilities are fundamental for decision-making, and understanding the causes of human capital depreciation in old age is especially important in an aging society. Using a longitudinal labor survey that collects direct proxy measures of cognitive skills, we study the effect of educational attainment on cognitive performance in late adulthood in South Africa. We find robust evidence that an increase in a year of schooling improves memory performance and general cognition. We also find evidence of heterogeneous effects of educational attainment on cognitive performance. We explore the mechanisms through which education can affect cognitive performance. We show that a more supportive social environment, improved health habits, and reduced stress levels likely play a critical role in mediating the beneficial effects of educational attainment on cognition among the elderly.
    Keywords: human capital, educational attainment, cognitive performance, developing countries, sub-Saharan Africa
    JEL: J14 J24 I21 F63 N37
    Date: 2021–09
  6. By: Zolbin, Maedeh Ghorbanian; Nikou, Shahrokh
    Abstract: The low level of health literacy skills often found in elderly people has been associated with a significant risk of poor access to health services and poor health status and makes it more likely that they will be prevented from obtaining and understanding the basic health information and services needed to make appropriate health decisions. Therefore, empowering the older population with health literacy skills could enable them to benefit from the use of various digital health sources, such as telemedicine, webpages, or other digital platforms, to improve their health quality and enable them to live independently for longer. The purpose of this paper is to perform a systematic review to analyse and evaluate studies that explored the relationship between health literacy skills and the use of digital health platforms in the context of elderly people. To do so, four main databases - Medline, Scopus, Web of Science, and PubMed -were searched based on the following inclusion criteria: (i) no geographical limitation, (ii) written in English, (iii) participants were aged ≥ 65 years, and (iv) studies were published between 2000 and 2020. By applying the inclusion and exclusion criteria for further analysis, the final dataset comprised 32 articles, which were analysed using the Preferred Reporting Items for Systematic Reviews (PRISMA) model. The results show that four different intervention methods could be used to increase elderlies' health literacy skills in the case of using digital health services. Besides, before implementing any training sessions, barriers of learning shall be identified and tackled.
    Keywords: Aging,Digital health service,E-health literacy,Elderly people,Health literacy,Intervention,Senior population,Systematic literature review
    Date: 2021
  7. By: Jain, Neha; Goli, Srinivas
    Abstract: India is on the edge of a demographic revolution with a rapidly rising working-age population. For the first time in this study, we investigate the role of the rising working-age population on per capita small savings in post offices and banks net of socio-economic characteristics using state-level panel data compiled from multiple sources for the period 2001-2018. Our comprehensive econometric assessment with multiple robustness checks provide three key findings: (1) Per capita private savings is increasing because of India’s growing working-age population, thus the ‘economic life cycle hypothesis’ is supported. (2) The demographic factors contribute around one-fourth of the per capita private savings inequality across Indian states. (3) The demographic window of economic opportunity for India can yield maximum benefits in terms of private savings when accompanied by favourable socio-economic policies on education, health, gender equity, and economic growth.
    Keywords: Demographic change, Working age population, Private savings, Life cycle hypothesis, State-level analysis
    JEL: J1 J11 O1 O15 O16
    Date: 2021–02–15
  8. By: Bolin, Kristian (Department of Economics, School of Business, Economics and Law, Göteborg University); Lood, Qarin (Institute of Neuroscience and Physiology, Department of Health and Rehabilitation, Sahlgrenska Academy, Centre for Ageing and Health – AgeCap, University of Gothenburg, Gothenburg, Sweden)
    Abstract: The time of retirement is analyzed in a theoretical framework taking capability and health into account. Capability if formalized as a stock characteristic which determines the attained amounts of a composite good which yields utility. The model is purposely simple and comprises one choice variable – the time of retirement. The core assumption is that inherited capability influences the rate of evolvement of health, and vice versa, and that the rates of change of the stocks differ between the pre- and post-retirement periods. The optimal retirement timing decision is characterized and the effects of the model’s exogenous variables on this decision are examined. We derive refutable comparative statistics results with respect to the model’s exogenous variables, and, for example, show – for a specified version of the model – how the timing of retirement depends on the inherited amounts of capability and health.
    Keywords: Capability; Health; Retirement
    JEL: I10 I30
    Date: 2021–09
  9. By: Jain, Neha; Goli, Srinivas
    Abstract: This paper projects potential demographic dividend for India for the period from 2001 to 2061 by using simulation modelling software, Spectrum 5.753 which integrates demographic and socio-economic changes. Two key findings, after checking their robustness, from the simulation modelling are: First, the effective demographic windows of opportunity for India is available for the period between 2011 and 2041, giving India roughly 30 years of demographic bonus. It is the period where the maximum of the first demographic dividend can be reaped before the ageing burden starts. Second, favourable demographic changes alone provide a demographic dividend of over 165,000 rupees (almost an additional 43 percentage) in terms of GDP per capita by 2061 when integrated with supporting socio-economic policy environment in terms of investment in human capital, family planning, decent employment opportunities, the rapid pace of urbanization, and agricultural growth.
    Keywords: Demographic Dividend, Working-Age Population, Health, Education, Employment
    JEL: J10 J11
    Date: 2021–02–15
  10. By: Abreha, Fasika Molla; Salmasi, Luca; Ianuale, Nicola; Pegoraro, Enrico
    Abstract: Introduction: The world population is aging and it is only expected to grow in the next 30 years reaching 16% of the total world population (1). Globally, fall among older adults is a major public health problem.The burden of mortality and morbidity as a result of fall incidents is high in the elderly. There is a multitude of fall prevention programs designed based on the different risk factors associated with fall risk. Among these exercise programs have been shown to reduce the incidence of falls by 13% (6) to 40% (7).The Otago Exercise Program is an eight-week exercise that involves 17 different exercises that vary based on intensity with different repetitions and weight. It has been used as the cornerstone of most fall prevention exercise programs and has been shown to reduce fall risk in the elderly population by 35% (2,3). More recently, the use of virtual technologies has been an emerging phenomenon in the practice of elderly rehabilitation and exercise program. The Holobalance program, a novel methodology developed under the EU Horizon 2020 innovation project (8), was initiated to develop and validate a new personalized hologram coach platform for virtual coaching, motivation, and empowerment of the aging population with balance disorders. Methods: Bayesian cost-effectiveness analysis of two alternatives namely Otago Exercise Program and Holobalance technology is performed by considering the relevant probabilities of the outcomes, the associated cost, and utility loss for each relevant outcome for three countries i.e. Italy, Germany, and Greece. Relevant data was obtained using literature review of the enumerated parameters and the associated cost as well as utility. Additional data regarding Holobalance technology was obtained from the first data of an ongoing clinical pilot. Results: The ICER associated with the highest WTP under consideration, 30000€, is - 103879 for Italy, -86560 for Greece, and -107666 for Germany. The average expected utility loss for the WTP of 30,000 Euros in the case of the Otago exercise program is -819.51, -624.77, -774.41 for Italy, Greece, and Germany respectively. In the case of Holobalance, it is -478.31, -352.57, and -383.53 respectively for Italy, Greece, and Germany. All the values of the EIB are positive in all of the willingness to pay values that were considered (10,000, 25,000, 30,000) for all of the three countries. The mean cost to implement the Otago exercise program is higher compared to the average cost for Holobalance for the three countries. Conclusion: In all the three countries considered in this analysis, Holobalance is found to be more cost-effective than the Otago exercise program. In this Bayesian Cost-Effectiveness Analysis, the Holobalnce technology is the dominant alternative with a lower cost and a higher level of effectiveness compared to the current standard therapy i.e Otago Exercise program.
    Keywords: Bayesian Cost Effectiveness Analysis, Holobalance, Fall, Elderly, Virtual Reality, Economic Evaluation
    JEL: C11 I00 I10 I11 I18
    Date: 2021–08–21
  11. By: Hannes Schwandt; Janet Currie; Marlies Bär; James Banks; Paola Bertoli; Aline Bütikofer; Sarah Cattan; Beatrice Zong-Ying Chao; Claudia Costa; Libertad Gonzalez; Veronica Grembi; Kristiina Huttunen; René Karadakic; Lucy Kraftman; Sonya Krutikova; Stefano Lombardi; Peter Redler; Carlos Riumallo-Herl; Ana Rodríguez-González; Kjell Salvanes; Paula Santana; Josselin Thuilliez; Eddy van Doorslaer; Tom Van Ourti; Joachim Winter; Bram Wouterse; Amelie Wuppermann
    Abstract: Although there is a large gap between Black and White American life expectancies, the gap fell 48.9% between 1990-2018, mainly due to mortality declines among Black Americans. We examine age-specific mortality trends and racial gaps in life expectancy in rich and poor U.S. areas and with reference to six European countries. Inequalities in life expectancy are starker in the U.S. than in Europe. In 1990 White Americans and Europeans in rich areas had similar overall life expectancy, while life expectancy for White Americans in poor areas was lower. But since then even rich White Americans have lost ground relative to Europeans. Meanwhile, the gap in life expectancy between Black Americans and Europeans decreased by 8.3%. Black life expectancy increased more than White life expectancy in all U.S. areas, but improvements in poorer areas had the greatest impact on the racial life expectancy gap. The causes that contributed the most to Black mortality reductions included: Cancer, homicide, HIV, and causes originating in the fetal or infant period. Life expectancy for both Black and White Americans plateaued or slightly declined after 2012, but this stalling was most evident among Black Americans even prior to the COVID-19 pandemic. If improvements had continued at the 1990-2012 rate, the racial gap in life expectancy would have closed by 2036. European life expectancy also stalled after 2014. Still, the comparison with Europe suggests that mortality rates of both Black and White Americans could fall much further across all ages and in both rich and poor areas.
    JEL: E21 I1 J1
    Date: 2021–09
  12. By: Jain, Neha; Goli, Srinivas
    Abstract: In this paper, we assess the economic benefits of demographic changes in India by employing econometric models and robustness checks based on panel data gathered over a period of more than three decades. Our analysis highlights four key points. First, the contribution of India’s demographic dividend is estimated to be around 1.9 percentage points out of 12% average annual growth rate in per capita income during 1981–2015. Second, India’s demographic window of opportunity began in 2005, significantly improved after 2011, and will continue till 2061. Third, our empirical analysis supports the argument that the realisation of the demographic dividend is conditional on a conducive policy environment with enabling aspects such as quality education, good healthcare, decent employment opportunities, good infrastructure, and gender empowerment. Fourth, the working-age population in India contributes around one-fourth of the inequality in per capita income across states. Thus, to reap the maximum dividends from the available demographic window of opportunity, India needs to work towards enhancing the quality of education and healthcare in addition to providing good infrastructure, gender empowerment, and decent employment opportunities for the growing working-age population.
    Keywords: Demographic Dividend, Economic Growth, Population Growth, Working-Age Population, Health, Education, Employment
    JEL: J10 J11 O1 O15
    Date: 2021–02–15

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