nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒12‒13
twelve papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. What is the child-related compensational pension system good for and what is not? By Németh, Petra; Szabó-Bakos, Eszter
  2. Elderly Poverty and Its Measurement By Niimi, Yoko; Horioka, Charles Yuji
  3. Target date funds and portfolio choice in 401(k) plans By Mitchell, Olivia S.; Utkus, Stephen P.
  4. Understanding the Rise in Life Expectancy Inequality By Dahl, Gordon B.; Kreiner, Claus Thustrup; Nielsen, Torben Heien; Serena, Benjamin Ly
  5. Redistribution across Europe: How much and to whom? By Bernhard Hammer; Michael Christl; Silvia De Poli
  6. Long-Term Care Partnership Effects on Medicaid and Private Insurance By Costa-Font, Joan; Raut, Nilesh
  7. Wealth Accumulation and Retirement Preparedness in Cross-National Perspective: A Gendered Analysis of Outcomes among Single Adults By Gornick, Janet; Sierminska, Eva
  8. Medicaid Expansion and the Mental Health of Spousal Caregivers By Costa-Font, Joan; Raut, Nilesh; Van Houtven, Courtney
  9. Evolution Of Sex Gap In Life Expectancy Across High-Income Countries: Universal Patterns And Country-Specific Attributes By Marina Vergeles
  10. Shrinking Working-Age Population and Food Demand: Evidence from Rural China By Han, Xinru; Li, Guojing
  11. The Effects of Demographic Change on Current Account and Foreign Asset Accumulation By Kim, Hyo Sang; Yang, Da Young; Kang, Eunjung
  12. Horizon 2050 : où la dynamique actuelle mène-t-elle l'économie mondiale ? By Lionel Fontagné; Erica Perego; Gianluca Santoni

  1. By: Németh, Petra; Szabó-Bakos, Eszter
    Abstract: There is increasing attention to the sustainability and fairness of the pay-as-you-go pension system as a consequence of the aging society and the imbalance between the old and the young generation’s number. In this system, the pension depends only on the previous contribution, which indirectly punishes childbearing. The purpose of this article is to compare the effect of the present Hungarian regulation to a possible child-related compensational pension scheme, where the amount of pension takes into account the childbearing time. The evaluation of the pension systems is based on the lifespan utility of representative agents (with or without children) and the economic effects of the possible pension reform. We built up a dynamic general equilibrium model in an overlapping generations framework (calibrated on the basis of Hungarian data) to investigate the effects of our pension reform proposal. As a result we receive that such a pension system could increases the utility of the consumer who has children by 0.2149% percent, but decrease the steady state utility of childless consumer by 0,0130% percent. The amount of children and the time spent with children increase slightly, but these positive elements that could have raised the output does not compensate the negative effect of the decreasing work-related efforts, so the output falls.
    Keywords: Computable General Equilibrium Models, OLG model, Public Pension, Retirement Policies
    JEL: C68 H55 J26 D15
    Date: 2021–12–04
  2. By: Niimi, Yoko; Horioka, Charles Yuji
    Abstract: This paper examines various aspects of elderly poverty and its measurement.It first discusses some of the most important issues relating to measuring elderly poverty.It then reviews recent trends in elderly poverty, which show considerable heterogeneity in the extent of elderly poverty even among developed countries. Such cross-country differences are due at least partly to differences in the generosity of public old-age pensions and other social safety nets for the elderly. Empirical evidence also corroborates that the expansion of public pension programs has often played a key role in reducing elderly poverty.
    Keywords: elderly poverty, population aging, poverty measurement, public pensions, H55, I32, J14
    Date: 2021–11
  3. By: Mitchell, Olivia S.; Utkus, Stephen P.
    Abstract: Target date funds in corporate retirement plans grew from $5B in 2000 to $734B in 2018, partly because federal regulation sanctioned these as default investments in automatic enrollment plans. We show that adopters delegated pension investment decisions to fund managers selected by plan sponsors. Including these funds in retirement saving menus raised equity shares, boosted bond exposures, curtailed cash/company stock holdings, and reduced idiosyncratic risk. The adoption of low-cost target date funds may enhance retirement wealth by as much as 50 percent over a 30-year horizon.
    Keywords: automatic enrollment,pension,portfolio allocation,endorsement effect,default effect,retirement saving
    JEL: D12 D14 D91 G41 G51 J32
    Date: 2021
  4. By: Dahl, Gordon B. (University of California, San Diego); Kreiner, Claus Thustrup (University of Copenhagen); Nielsen, Torben Heien (University of Copenhagen); Serena, Benjamin Ly (University of Copenhagen)
    Abstract: We provide a novel decomposition of changing gaps in life expectancy between rich and poor into differential changes in age-specific mortality rates and differences in "survivability". Declining age-specific mortality rates increases life expectancy, but the gain is small if the likelihood of living to this age is small (ex ante survivability) or if the expected remaining lifetime is short (ex post survivability). Lower survivability of the poor explains between one-third and one-half of the recent rise in life expectancy inequality in the US and the entire change in Denmark. Our analysis shows that the recent widening of mortality rates between rich and poor due to lifestyle-related diseases does not explain much of the rise in life expectancy inequality. Rather, the dramatic 50% reduction in cardiovascular deaths, which benefited both rich and poor, made initial differences in lifestyle-related mortality more consequential via survivability.
    Keywords: mortality, life expectancy, inequality
    JEL: I14 J10
    Date: 2021–09
  5. By: Bernhard Hammer (TU Wien and Wittgenstein Centre); Michael Christl (European Commission - JRC); Silvia De Poli (European Commission - JRC)
    Abstract: Governments face a potential trade-off between provision for the growing population in retirement and the support of working-age households with low income. Using EUROMOD-based microdata from 28 countries, we (a) quantify the redistribution to the pensioner and non-pensioner populations, (b) study the position of net beneficiaries in the overall income distribution and (c) analyse how taxes and benefits affect the working-age population with low income. Our results provide novel insights into the distributive role of tax-benefit systems across Europe. Interestingly, a strong overall redistribution between households is associated with generous pensions for a portion of the retirees but negatively related to support for low-income households.
    Keywords: Redistribution, Welfare state, Inequality, Microsimulation, EUROMOD
    JEL: H11 H23
    Date: 2021–11
  6. By: Costa-Font, Joan (London School of Economics); Raut, Nilesh (London School of Economics)
    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: 2021–09
  7. By: Gornick, Janet (CUNY Graduate Center); Sierminska, Eva (LISER (CEPS/INSTEAD))
    Abstract: Wealth is an increasingly important dimension of economic well-being and is attracting rising attention in discussions of social inequality. In this paper, we compare – within and across countries – wealth outcomes, and link those to both employment-related factors and policy solutions that have the potential to improve wealth creation and retirement security for women. By constructing country-specific portraits of wealth outcomes and "retirement preparedness," we reveal extensive cross-national variation in multiple facets of wealth. Our regression analysis finds a statistically significant and positive effect of work experience on wealth, with that effect, in general, increasing over time. The effect of work experience for single women is greater than for single men, suggesting that, among men, other, stronger forces are at work in creating wealth. The retirement preparedness outcomes indicate that single women in all three countries are in a precarious position at retirement, with much lower expected annual wealth levels than single men. The second preparedness indicator, which links expected annual wealth to income, demonstrates that men have the potential to cover 1larger shares of their income at retirement – and thus are more able, than their female counterparts, to maintain standards of living achieved earlier in life. Our policy discussion indicates that employment remains a viable option for ultimately bolstering women's wealth accumulation. Many scholars, gender equality advocates, and policymakers have argued for raising women's employment rates – for a multitude of reasons – but few, if any, have made the case for strengthening women's employment in order to ultimately bolster women's wealth building. We hope to help reduce the gap in the literature on policy supports for women's employment and re-open the discussion on how women can create more wealth.
    Keywords: wealth, gender, labor market
    JEL: J10 J16 I38
    Date: 2021–10
  8. By: Costa-Font, Joan (London School of Economics); Raut, Nilesh (London School of Economics); Van Houtven, Courtney (Duke University)
    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: 2021–09
  9. By: Marina Vergeles (National Research University Higher School of Economics)
    Abstract: The sex gap in life expectancy (LE) at birth is currently narrowing in all high-income countries. Previous research on Western European and English-speaking (WE&ES) countries suggested that smoking-related mortality at ages 50+ was largely responsible for both widening and subsequent narrowing of the gap. However, countries of Central and Eastern Europe (CEE) have had particularly high excess male mortality at young and middle ages that couldn`t be fully attributed to the smoking-related causes. We use the Human Mortality Database to examine the patterns and time trends in male/female differences in LE across 41 high-income countries and 7 country groups from 1959 until the latest available year. Contour decomposition is applied to estimate the contribution of different ages to the maximum sex gap and its change ever since. While the UK was the first country to reach the peak in the sex gap in 1969, Greece did it half a century later, in 2009. The largest male disadvantage in LE was observed in Russia in 2005 (13.7 years), Israel had a peak in 1999 with just 4.4 years. There is a persistent difference between countries and particularly country groups in the age-specific contribution to the maximum sex gap. In WE&ES countries ages older than 50 play the major role in determining the sex gap while CEE countries have high excess male mortality in young and middle ages (20-50). The narrowing of the sex gap in CEE countries hasn`t substantially changed the age contribution. Mortality at ages younger than 50 still plays an important role in determining the sex gap in LE in these countries. Differences in the sex gap between countries add a new dimension to a previously established East-West mortality divide. Country specifics must be taken into account to develop public health policies aimed at reducing sex mortality inequalities
    Keywords: sex gap in life expectancy, gender differences in health, mortality, decomposition.
    JEL: J10 J11 I14 N32 N34
    Date: 2021
  10. By: Han, Xinru; Li, Guojing
    Keywords: Labor and Human Capital, Food Consumption/Nutrition/Food Safety
    Date: 2021–08
    Abstract: The current account surplus of Korea mainly comes from its export-driven trade surplus. The current account surplus can be interpreted as foreign savings for future consumption, which is ultimately accumulated in a net foreign asset position. Net foreign assets can contribute to the current account surplus with income balances such as profits, dividends and interest. Korea has maintained its current account surplus since 1998 due to the demographic structure, but only entered into a net foreign assets surplus country in 2014. Under Korea’s rapid demographic change, it is necessary to construct a positive feedback-loop structure between the current account surplus and net foreign assets.
    Keywords: demographic; current account; foreign asset; surplus
    Date: 2020–12–09
  12. By: Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Erica Perego; Gianluca Santoni
    Abstract: Pandemics, global warming, food security, ageing, depletion of certain raw materials... Our economies are confronted with global problems, calling for the long term and raising intergenerational questions. To guide economic policies, it is therefore essential to have a coherent framework for thinking. The MaGE (Macroeconometrics of the Global Economy) model, developed by CEPII, makes it possible to draw the basic trends of the world economy up to 2050. If we assume that the current growth and technological catch-up dynamics will continue, and taking into account demographic dynamics, the balance of economic power will be strongly transformed over the next generation. Above all, energy consumption is expected to continue to grow at a sustained rate, up to a doubling, despite efforts to improve energy efficiency. Ambitious policies to decarbonise our economies will then be necessary to make the prospects for economic growth sustainable.
    Abstract: Pandémies, réchauffement climatique, sécurité alimentaire, vieillissement, épuisement de certaines matières premières… Nos économies sont confrontées à des problèmes globaux, convoquant le long terme et posant des questions intergénérationnelles. Pour guider les politiques économiques, il est dès lors indispensable de disposer d'un cadre de réflexion cohérent. Le modèle MaGE (pour Macroeconometrics of the Global Economy), développé par le CEPII, permet de dessiner les tendances de fond de l'économie mondiale à l'horizon 2050. Si l'on suppose que les dynamiques de croissance et de rattrapage technologique actuelles vont se poursuivre, et compte tenu des dynamiques démographiques, l'équilibre des puissances économiques sera fortement transformé au cours de la génération à venir. Surtout, la consommation d'énergie devrait continuer de croître à un rythme soutenu jusqu'à doubler, en dépit des efforts en matière d'efficience énergétique. Des politiques ambitieuses de décarbonation de nos économies seront alors nécessaires pour rendre soutenables les perspectives de croissance économique.
    Keywords: Growth models,Long-term growth,Economic projections,Energy consumption,Modèles de croissance,Croissance à long-terme,Projections économiques,Consommation d'énergie
    Date: 2021–11–12

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