nep-age New Economics Papers
on Economics of Ageing
Issue of 2022‒01‒10
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Informal care at old age at home and in nursing homes: determinants and economic value. By Quitterie Roquebert; Marianne Tenand
  2. Politics and organized interests in Swedish pension policy By Anderson, Karen M.
  3. The Impact of Health and Education on Labor Force Participation in Aging Societies – Projections for the United States and Germany from a Dynamic Microsimulation By René Böheim; Thomas Horvath; Thomas Leoni; Martin Spielauer
  4. Call for reforming our democracies: rejuvenating the median voter By Fischer, Justina AV
  5. Population Aging and the US Labor Force Participation Rate By Daniel H. Cooper; Christopher L. Foote; Maria Jose Luengo-Prado; Giovanni P. Olivei
  6. Health Improvements Impact Income Inequality By Rainer Franz Kotschy
  7. A Balance-Sheet Analysis of the Dutch Economy By Ms. Ruo Chen
  8. State of the art on ethical, legal, and social issues linked to audio- and video-based AAL solutions By Ake-Kob, Alin; Blazeviciene, Aurelija; Colonna, Liane; Cartolovni, Anto; Dantas, Carina; Fedosov, Anton; Florez-Revuelta, Francisco; Fosch-Villaronga, Eduard; He, Zhicheng; Klimczuk, Andrzej; Kuźmicz, Maksymilian; Lukács, Adrienn; Lutz, Christoph; Mekovec, Renata; Miguel, Cristina; Mordini, Emilio; Pajalic, Zada; Pierscionek, Barbara Krystyna; Jose Santofimia Romero, Maria; Ali Salah, Albert; Sobecki, Andrzej; Solanas, Agusti; Tamò-Larrieux, Aurelia
  9. Inefficiency in Social Security Trust Funds Forecasts By Kajal Lahiri; Junyan Zhang; Yongchen Zhao
  10. Constrained Kriging for smoothing and forcasting mortality rates By Zied Chaieb; Djibril Gueye

  1. By: Quitterie Roquebert; Marianne Tenand
    Abstract: This paper provides a comprehensive analysis of informal care receipt by the French individuals aged 60 or older. The literature has focused on the community, leaving informal care in residential care settings in the shadow. We leverage data from a representative survey (CARE) conducted in 2015-2016 on both community-dwelling individuals and nursing home residents. Focusing on the 60+ with activity restrictions, we show that 76% of nursing home residents receive help with the activities of daily living from relatives, against 55% in the community. The number of hours conditional on receipt is yet 3.5 times higher in the community. Informal care represents 180 million hours per month and a value equivalent to 1.5% of GDP, care in the community representing 95% of the total. We investigate the determinants of informal care receipt. Using an Oaxaca-type approach, we disentangle between two mechanisms explaining differences observed across settings, namely the differences in population composition (endowments) and the differences in the association of individual characteristics with informal care (coefficients). They are found to have a similar contribution at the extensive margin. Our results imply that private costs make up for the majority (80%) of the costs associated with long-term care provision once informal care is taken into account. They also highlight that informal care is extremely common for nursing home residents. Existing evidence on the determinants of informal care receipt in the community has however limited relevance to understand informal care behaviors in nursing homes.
    Keywords: informal care, long-term care, ageing, valuation, decomposition.
    JEL: D10 I10 J14 I18
    Date: 2021
  2. By: Anderson, Karen M.
    Abstract: Sweden is often hailed as a model for far-reaching pension reform. The comprehensive 1994/1998 reform replaced the existing statutory system that had been in place since 1960 with a new system based on notional defined contributions, individual investment accounts, and a guarantee pension. The reformed pension system also includes "automatic stabilizers" that ensure that pension liabilities and assets remain in balance. Sector-wide occupational pension schemes provide a topup to public pensions. This study analyses the origins, negotiation, and effects of the reformed pension system. It discusses the weaknesses of the preexisting system and the broad political compromise that emerged in the 1990s around reform and continues to shape the direction of policy change. The study also ex-amines the role of occupational pensions in the overall pension system, the role of unions in shaping the reform, and the links between labour market performance and the pension system.
    Date: 2021
  3. By: René Böheim; Thomas Horvath; Thomas Leoni; Martin Spielauer
    Abstract: Using a highly stylized dynamic microsimulation model, we project the labor force of the United States up to the year 2060 and contrast these projections with projections for Germany to assess differential effects on outcomes The projections are consistent with the U S Census Bureau’s and Eurostat’s demographic projections. Our modeling approach allows to show and quantify how policy changes the future size of the labor force, which we assess with a series of what-if scenarios. Both the US and Germany are expected to undergo demographic aging, but their demographic fundamentals differ starkly. This has strong implications for their labor force developments. According to our microsimulation, the US labor force will, despite population aging, increase by 16.2 percent in the age groups 15 to 74 (corresponding to 25.2 million workers) between 2020 and 2060, while Germany will experience a decline by 10.7 percent (4.4 million workers). In these baseline projections, improvements in the education structure will add about two million persons to the US labor force and about half a million persons to the German labor force by 2060. In the what-if scenarios, we examine the implications of improvements in the educational structure of the population and of policies which address the health impediments for labor force participation. Of the educational scenarios that we evaluate, increasing the number of persons who achieve more than lower education has the strongest positive impact on labor force participation, relative to the number of additional years of schooling implied by the various scenarios. Shifting people from intermediate to higher education levels also increases labor force participation in higher age groups, however, this is partially offset by lock in effects at younger ages. Our projections highlight that improvements in the labor market integration of people with health limitations provide a particularly promising avenue to increase labor force participation rates and thus help to address the challenges posed by demographic aging. If the health gap in participation rates in the United States were similar to that currently observed in Sweden, the labor force in 2060 would be larger by about 14.9 million persons.
    JEL: C5 J11 J21
    Date: 2021–12
  4. By: Fischer, Justina AV
    Abstract: Aging populations threaten the future of Western societies and their democratic systems. An aging electorate leads to policies dominated by fear (of death), hindering important social reforms. This article describes this phenomenon from a political philosophy and behavioral psychology perspective and proposes a solution based on a new interpretation of social contract theory. Specifically, I propose the down-weighing of ballots of older voters by their remaining lifespans. I conclude with a discussion of the justice and the fairness of my proposal from the perspective of political philosophy and public economics.
    Keywords: median voter; social contract; aging population; voting
    JEL: H0 I3 J10 Z1
    Date: 2021–12–26
  5. By: Daniel H. Cooper; Christopher L. Foote; Maria Jose Luengo-Prado; Giovanni P. Olivei
    Abstract: The labor force participation rate dropped sharply at the beginning of the pandemic, and as of November 2021 it had recovered only about half of its lost ground. The failure of the participation rate to get closer to its level immediately before the pandemic has puzzled many analysts. In this note, we show that the current participation rate is much less puzzling if one compares it with participation in November 2017 (the last time the unemployment rate was at its current level of 4.2 percent), rather than February 2020 (immediately before the pandemic). Since November 2017, population aging has continued to exert a strong downward pull on the participation rate, so that participation is now close to what one would expect, given the current unemployment rate and the current age structure of the population. In the future, rising educational attainment will offset the negative effect of aging on participation to some degree. But a complete recovery of the participation rate to its February 2020 level may be difficult to achieve without substantial further declines in the unemployment rate.
    Keywords: labor force participation; labor force composition; demographic trends; labor market conditions; COVID-19
    JEL: E24 J11 J21
    Date: 2021–12–20
  6. By: Rainer Franz Kotschy
    Abstract: This paper investigates whether and to what extent long-run trends in population health affected income inequality in the United States over the period 1960-2000. To isolate exogenous variation in health over time, the analysis exploits the sharp decline in cardiovascular disease mortality across states that originated from medical advances in the treatment and prevention of these diseases after 1960. The results demonstrate that health improvements contributed to rising income inequality through mechanisms related to education.
    Keywords: population health, aging, Gini coefficient, skill-biased technical change
    JEL: I14 I24 J11
    Date: 2021
  7. By: Ms. Ruo Chen
    Abstract: The Dutch economy is characterized by substantial financial balance sheets in the private sector. Uncommonly large gross financial assets and liabilities are found in the financial sector, whereas households own significant net financial wealth. The large gross financial assets and liabilities reflect a dominant role of multinational corporations (MNCs). Despite their size, these financial positions have not brought significant financial stability risks to the country. On the other hand, Dutch households’ long balance sheets have been associated with depressed consumption and volatile real estate investment, which has probably exacerbated the cyclicality of the economy. The expected reform of the pension system is likely to change the way household balance sheets interact with private consumption.
    Keywords: balance sheet, financial accounts, multinational corporation, household, pension; net financial assets; gross financial assets; corporation leverage; way household balance sheets interact; cyclicality of the economy; Financial statements; Financial sector; Household consumption; Pension spending; Pensions; Global
    Date: 2021–10–22
  8. By: Ake-Kob, Alin; Blazeviciene, Aurelija; Colonna, Liane; Cartolovni, Anto; Dantas, Carina; Fedosov, Anton; Florez-Revuelta, Francisco; Fosch-Villaronga, Eduard; He, Zhicheng; Klimczuk, Andrzej; Kuźmicz, Maksymilian; Lukács, Adrienn; Lutz, Christoph; Mekovec, Renata; Miguel, Cristina; Mordini, Emilio; Pajalic, Zada; Pierscionek, Barbara Krystyna; Jose Santofimia Romero, Maria; Ali Salah, Albert; Sobecki, Andrzej; Solanas, Agusti; Tamò-Larrieux, Aurelia
    Abstract: Ambient assisted living (AAL) technologies are increasingly presented and sold as essential smart additions to daily life and home environments that will radically transform the healthcare and wellness markets of the future. An ethical approach and a thorough understanding of all ethics in surveillance/monitoring architectures are therefore pressing. AAL poses many ethical challenges raising questions that will affect immediate acceptance and long-term usage. Furthermore, ethical issues emerge from social inequalities and their potential exacerbation by AAL, accentuating the existing access gap between high-income countries (HIC) and low and middle-income countries (LMIC). Legal aspects mainly refer to the adherence to existing legal frameworks and cover issues related to product safety, data protection, cybersecurity, intellectual property, and access to data by public, private, and government bodies. Successful privacy-friendly AAL applications are needed, as the pressure to bring Internet of Things (IoT) devices and ones equipped with artificial intelligence (AI) quickly to market cannot overlook the fact that the environments in which AAL will operate are mostly private (e.g., the home). The social issues focus on the impact of AAL technologies before and after their adoption. Future AAL technologies need to consider all aspects of equality such as gender, race, age and social disadvantages and avoid increasing loneliness and isolation among, e.g. older and frail people. Finally, the current power asymmetries between the target and general populations should not be underestimated nor should the discrepant needs and motivations of the target group and those developing and deploying AAL systems. Whilst AAL technologies provide promising solutions for the health and social care challenges, they are not exempt from ethical, legal and social issues (ELSI). A set of ELSI guidelines is needed to integrate these factors at the research and development stage.
    Keywords: Ethical principles,Privacy,Assistive Living Technologies,Privacy by Design,General Data Protection Regulation,housing
    JEL: O18 D19 R58 M14 O33
    Date: 2021
  9. By: Kajal Lahiri; Junyan Zhang; Yongchen Zhao
    Abstract: We examine forecast accuracy and efficiency of the Social Security Administration’s projections for cost rate, trust fund balance, trust fund ratio made during 1980-2020 with horizons up to 95 years. We find that the reported deterioration in the accuracy of the forecasts during 2010’s has reversed. The level of informational inefficiency was pervasive during 1990-2009, although it shows signs of improvement after 2010.
    Keywords: social security trust funds, long-range solvency forecasts, Nordhaus test, forecast efficiency, fixed-event forecast revisions
    JEL: C53 E37 E66 H55 H68
    Date: 2021
  10. By: Zied Chaieb (Quantlabs - Quanteam); Djibril Gueye (Quantlabs - Quanteam)
    Abstract: Mortality surface is a function of age and year with the main characteristic of being increasing with respect to ages from a given age. One of the major challenges of its construction is to take this last specificity into account. In this paper, we propose to use constrained Kriging for such a construction. Our approach is based on the finite dimensional approximation of the Gaussian process. We first show the ability of Kriging to construct mortality surfaces and then compare its performance against classical Kriging models with trend functions such as those used in [LRZ18]. Our empirical study based on mortality data from three countries (France, Italy and Germany) showed the need to add a constraint of convexity in age and illustrated through an RMSE criterion that Kriging constraint provided better results in terms of out-of-sample forcasting.
    Date: 2021–11–29

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