nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒10‒18
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The heterogeneous effects of the Great Recession on informal care to the elderly By Carro, Jesús M.; Pronkina, Elizaveta
  2. The long game: Fiscal outlooks to 2060 underline need for structural reform By Yvan Guillemette; David Turner
  3. Elderly Care and Informal Family Care By Miyake, Atsushi; Shintani, Masaya; Yasuoka, Masaya
  4. Long-Term Care Partnership Effects on Medicaid and Private Insurance By Joan Costa-i-Font; Nilesh Raut
  5. Medicaid Expansion and the Mental Health of Spousal Caregivers By Joan Costa-i-Font; Nilesh Raut; Courtney Harold Van Houtven
  6. Fear of COVID-19 Contagion: The Idiosyncratic Effects of an Aggregate Pandemic Shock By Junichi Kikuchi; Ryoya Nagao; Yoshiyuki Nakazono

  1. By: Carro, Jesús M.; Pronkina, Elizaveta
    Abstract: This paper studies the role of unobserved factors to measure the impact of the economic downturn on informal care availability to the elderly in Europe. We use the Survey of Health, Ageing and Retirement in Europe (SHARE), which allows controlling for socio-demographic variables. Our results show that the impact of the Great Recession on care receipt depends not only on observed, but also on unobserved characteristics. For 21 percent of the sample, the effect is three to four times larger than the average effect for the entire sample. For 57 percent of the sample, there is no effect of the economic crisis, and this is due to unobservable factors. In our estimation process, we are able to characterize how this unobserved heterogeneity correlates with the observable variables. Moreover, we show that if the unobserved heterogeneity in the effect of the crisis is ignored, then we are not able to capture that there is no effect for more than half of the individuals, even if we allow for unobserved heterogeneity in the intercept of the model and for the heterogeneous effect of the crisis based on observables.
    Keywords: Informal Care; Great Recession; Unobserved Heterogeneity
    JEL: I18 J14 C2
    Date: 2021–10–13
  2. By: Yvan Guillemette; David Turner
    Abstract: This paper updates the long-term scenarios to 2060 last published in July 2018, with a special focus on fiscal sustainability and risks. In a baseline economic and fiscal scenario, trend real GDP growth for the OECD + G20 area declines from around 3% post-COVID to 1½ per cent in 2060, mainly due to a deceleration of large emerging-market economies. Meanwhile, secular trends such as population ageing and the rising relative price of services will keep adding pressure on government budgets. Without policy changes, maintaining current public service standards and benefits while keeping public debt ratios stable at current levels would increase fiscal pressure in the median OECD country by nearly 8 percentage points of GDP between 2021 and 2060, and much more in some countries. Policy scenarios show that reforms to labour market and retirement policies could help boost living standards and alleviate future fiscal pressures. An ambitious reform package combining labour market reforms to raise employment rates with reforms to eliminate early retirement pathways and keep effective retirement ages rising by two thirds of future gains in life expectancy could halve the projected increase in fiscal pressure in the median country, even after taking into account future spending pressures associated with ageing.
    Keywords: fiscal pressure, fiscal sustainability, labour market reform, long-term projection, long-term scenario, retirement age
    JEL: O4 H68 J11 E6
    Date: 2021–10–19
  3. By: Miyake, Atsushi; Shintani, Masaya; Yasuoka, Masaya
    Abstract: Informal family care presents important difficulties for the entire economy. Because of short supplies of formal elderly care, some family members are compelled to leave work to provide care for elderly relatives. Therefore, the overall loss of added value caused by informal family care is not negligible. After developing a model to assess how households determine allocation of formal and informal elderly care, we analyze subsidy effects for elderly care in the economy. Results show that subsidies for formal care that is bought by people of the younger generation are more effective for decreasing losses attributable to informal elderly care.
    Keywords: Formal Care, Informal Care, Subsidy for Elderly Care, Unemployed Family Caregiver
    JEL: J14 O17
    Date: 2021–10–11
  4. By: Joan Costa-i-Font; Nilesh Raut
    Abstract: Can the expansion of Medicaid, a means-tested health and long-term care insurance, be slowed down by incentivising the purchase of private long-term care insurance (LTCI)? We study the implementation of the long-term care insurance partnership (LTCIP) program, a joint federal and state-level program that intended to promote LTCI coverage. Drawing on a difference-in-differences (DD) design we study the effect of the rollout of the LTCIP program between 2005 and 2016 on both LTCI uptake and Medicaid eligibility, and we estimate the effect on Medicaid savings. Drawing on a difference-in-differences (DD) design, we find that, unlike previous estimates, the introduction of the LTCIP does significantly increase LTCI coverage and reduce the uptake of Medicaid. The effects are driven by the introduction of LTCIP in states after 2010. We estimate that the adoption of LTCIP has given rise to an average Medicaid saving of $36 for every 65-year-old. This suggests scope for LTCI arrangements to reduce Medicaid spending.
    Keywords: long-term care partnerships, long-term care insurance, Medicaid, United States, difference-in-differences
    JEL: I18 H11 H24
    Date: 2021
  5. By: Joan Costa-i-Font; Nilesh Raut; Courtney Harold Van Houtven
    Abstract: Health insurance expansions can exert wellbeing effects on individuals who provide informal care to their loved ones, reducing their experience of depression. This study exploits evidence from the Affordable Care Act’s (ACA) Medicaid expansion to examine the effects on the mental wellbeing of informal caregivers. Drawing on an event study and a Difference-in-Differences (DID) design we investigate the policy impact of ACA Medicaid expansion using longitudinal evidence (from the Health and Retirement Study, HRS) for 2010 to 2018 for low-income individuals aged 64 or below. We find that ACA’s Medicaid expansion reduced depressive symptoms among caregivers, and specifically we estimate that exposure to ACA Medicaid expansion gives rise to a 0.38 points (equivalent to 4-5%) reduction in the CESD score (a negative scale in which the lowest scale indicates the best mental wellbeing). We also find that ACA Medicaid causes a spillover effect at the household level, improving the well-being of the spouse care recipient. Our results are robust to various specifications, and we identify several potential driving mechanisms for the findings: reductions in out of -pocket expenses and labor supply and, as expected, increased Medicaid uptake. The evidence from falsification tests confirms that the estimated effects are purely due to ACA’s Medicaid expansion and no other phenomena.
    Keywords: insurance expansion, Medicaid, mental wellbeing, ACA, spousal mental health, informal care
    JEL: I18
    Date: 2021
  6. By: Junichi Kikuchi; Ryoya Nagao; Yoshiyuki Nakazono
    Abstract: We examine how the fear of COVID-19 contagion influences consumer expenditure patterns. We show that the consumption expenditure responses to the spread of the COVID-19 pandemic are significantly heterogeneous across generations. We find that the elderly spend less than the younger generation by at least 5% as COVID-19 spread. In fact, those aged above 60 significantly decreased their spending even on food and drink products by 13%. We also find that the elderly forgo shopping in favor of the younger generation. These heterogeneous responses are likely to be due to the fear of the COVID-19 infection.
    Date: 2021–10

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