nep-age New Economics Papers
on Economics of Ageing
Issue of 2022‒04‒04
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Fertility and Parental Retirement By Julius Ilciukas
  2. Aggregate Health Shock and Retirement Decision By Hyunduk Suh; SeEun Jung
  3. Demographic Trends and the Transmission of Monetary Policy By Giacomo Mangiante
  4. Does the Pattern of Age Dependency Matter in the Promotion of Financial Development in an Emerging Economy? By Mantu Kumar Mahalik; John Nkwoma Inekwe; Kuntal K. Das; Umakant Dash; Augustine C Arize
  5. Envejecimiento y vejez By Huenchuan, Sandra; Soto de la Rosa, Humberto; Gutiérrez, Elsa; Lamotte, Citlalli
  6. Better pensions for the European Union’s self-employed By Rebecca Christie; Monika Grzegorczyk; Diane Mulcahy
  7. Assessing Components of Uncertainty in Demographic Forecasts with an Application to Fiscal Sustainability By Alho, Juha; Lassila, Jukka
  8. Understanding how COVID-19 has Changed Teachers’ Chances of Remaining in the Classroom By Zamarro, Gema; Camp, Andrew; Fuchsman, Dillon; McGee, Josh B.
  9. Loneliness and health among the elderly.The role of cultural heritage and relationship quality By Elizabeth Casabianca; Matija Kovacic
  10. Strategic Parent Meets Detached Child? Parental Intended Bequest Division and Support from Children By Ho, Christine
  11. Maintenance Problem of Insufficiently Financed Pension Funds -- A Stochastic Approach By Manuel Alberto M. Ferreira

  1. By: Julius Ilciukas (University of Amsterdam)
    Abstract: I study how retirement delays in one generation affect fertility in the subsequent generation. I use administrative Dutch data and exploit the 2006 Dutch pension reform. The reform induced individuals born from January 1, 1950 onward to de- lay retirement while exempting those born earlier. I find that this reduced fertility among women with reform-affected mothers. The reduction is likely permanent and economically significant. I supplement my analysis with survey evidence and argue that the fertility reduction is driven by reduced grandparental child care supply. My results suggest that delaying retirement may undermine the goal of balancing pension systems through a resulting fertility reduction.
    JEL: J13 H55 J22
    Date: 2022–03–02
  2. By: Hyunduk Suh (Inha University); SeEun Jung (Inha University)
    Abstract: The retirement of old workers increased during the COVID-19 pandemic, and health concerns are considered as a critical factor. To isolate the effect of pure health concerns during the pandemic, we analyze the impact of the aggregate health shock on retirement decisions using a life-cycle model. The aggregate health shock changes the economy from the normal state to the pandemic state, where the probability of adverse idiosyncratic health shock increases, especially if agents are working. Simulation results suggest that the shock accelerates the retirement of agents aged between 60 and 64. Its impact is quantitatively greater than the effect of a five percent reduction in labor income. The retirement response is heterogeneous across agent types, influenced by various factors, including preference, income, health status, and health expenditure. The negative effect of the aggregate health shock is significant even though the shock is expected to be temporary. Also, the effect hinges on the assumption that working poses a greater risk of receiving a negative health shock than retiring.
    Keywords: Retirement, Health shock, COVID-19, Life-cycle model
    JEL: J26 I18 E24
    Date: 2022–03
  3. By: Giacomo Mangiante
    Abstract: This paper studies the impact of demographic trends on the transmission of monetary policy. In particular, I propose and quantify a novel channel to explain how population aging might affect the effectiveness of monetary policy and the flattening of the Phillips curve: older individuals purchase more from product categories with higher levels of price rigidity - categories which adjust their prices less often - so the aggregate frequency of price adjustment decreases as the population ages. Using micro data on consumer expenditure, I document the negative relationship between age and the frequency of price adjustment and find that it is mainly due to the higher share of services consumed by old households. At the macro level, if prices are more rigid output should respond more to monetary shocks. To test this hypothesis, I exploit the cross-sectional variation in demographic structures across the U.S. and I show that the economic activity in states with a higher old-age dependency ratio reacts more to monetary shocks. Finally, I rationalise these findings using a two-sector OLG New Keynesian model where demographic trends shift aggregate demand towards services, i.e., the stickier expenditure category. Combining the model with population projections for the U.S., I find that the changes in the age distribution between 1980 and 2010 increased the contemporaneous response of output to monetary shocks by 6% and will have increased it by 10% in 2050. Moreover, demographic trends explain around 10% of the decrease in the slope of the Phillips curve.
    Keywords: Monetary policy, age structure, consumption heterogeneity, Phillips curve
    JEL: E52 J11
    Date: 2022–03
  4. By: Mantu Kumar Mahalik; John Nkwoma Inekwe; Kuntal K. Das (University of Canterbury); Umakant Dash; Augustine C Arize
    Abstract: In this study, we examine the financial development effect of population aging pattern in India. We examine the period 1960 to 2017 and analyse the various types of age dependency which includes both old and young measures. By using structural VAR and ARDL techniques, we find that changes in young age dependency have a significant impact on changes in financial development in India while dependency by the old generation does not affect it. This study suggests that government and policymakers should protect the health and working conditions of young age people for the promotion of better financial development in India.
    Keywords: Financial Development; Age Dependency; SVAR; India
    JEL: F39 J11 C22
    Date: 2022–03–01
  5. By: Huenchuan, Sandra; Soto de la Rosa, Humberto; Gutiérrez, Elsa; Lamotte, Citlalli
    Date: 2021–07–28
  6. By: Rebecca Christie; Monika Grzegorczyk; Diane Mulcahy
    Abstract: Self-employed workers are taking on a larger role in the European economy, particularly workers who operate as independent contractors rather than as small-business owners with their own workforce. Becoming self-employed offers flexibility and entrepreneurial potential, but can limit access to state-sponsored pension schemes. We assess the current state of pension policy across the European Union and take a more detailed look at five countries to see how independent workers are...
    Date: 2022–03
  7. By: Alho, Juha; Lassila, Jukka
    Abstract: Abstract When the future evolution of demographic processes is described in a stochastic setting, the challenge is to communicate the meaning of forecast uncertainty in an understandable way, to decision makers and public at large. For the purpose of risk communication, a formal setting is developed, in which the roles of the demographic processes on point forecasts and predictive distributions can be elucidated. The communication problem becomes central in fiscal decision making, when eventual forecast errors have differential implications on the value of the policy options being considered. Tax rate that is required to maintain financial sustainability, until a given target year, is used for illustration.
    Keywords: Aging, Demography, Predictive distribution, Risk communication, Stationary equivalent population
    JEL: J11 J18 H68
    Date: 2022–02–25
  8. By: Zamarro, Gema (University of Arkansas); Camp, Andrew (University of Arkansas); Fuchsman, Dillon (Sinquefield Center for Applied Economic Research, Saint Louis University); McGee, Josh B. (University of Arkansas)
    Abstract: The 2020-2021 academic year was a trying year for teachers. We use a nationally representative sample of teachers from the RAND American Teacher Panel to document that teachers’ stated consideration of leaving the profession increased during the pandemic. We also study factors associated with teachers’ consideration of leaving the profession and high levels of job burnout during the pandemic. Approaching retirement age (being 55 or older), having to change instruction modes, health concerns, and high levels of job burnout all appear to be important predictors of the probability of considering leaving or retiring from teaching. Hybrid teaching increased consideration of leaving the profession because of COVID. Health concerns and switching instruction modes are all associated with higher levels of concern about job burnout. Interestingly, those approaching retirement ages do not present higher levels of concern about job burnout than younger teachers. Although increased consideration of leaving and concern about burnout do not yet appear to have materialized into higher attrition rates so far, higher levels of job dissatisfaction could affect teacher effectiveness and could harm student academic progress.
    Keywords: Teacher turnover; teacher retention; job burnout; COVID-19
    JEL: I20 J18 J28
    Date: 2022–02–28
  9. By: Elizabeth Casabianca (Joint Research Centre (JRC),Ivrea); Matija Kovacic (Department of Economics, University Of Venice CÃ Foscari; Joint Research Centre (JRC), Ivrea)
    Abstract: We estimate the direct causal effect of loneliness on a variety of health outcomes using a sample of second-generation immigrants drawn from the Survey of Health, Ageing and Retirement in Europe. In an effort to account for the endogeneity of self-declared loneliness, we explore the link between loneliness and a specific cultural trait strongly associated with quality of relations and use maternal cultural background as an instrument for loneliness. We thus also assess the importance of cultural heritage in shaping individuals' perceptions of loneliness. Additionally, we investigate one pathway by which some specific ancestral factors may influence the formation of cultural traits in the modern era. Our results suggest that loneliness has a significant impact on health, both mental and physical. Notably, our identification strategy allows us to uncover a more severe effect of loneliness on health than that found in an OLS setting. These findings are robust to a battery of sensitivity checks.
    Keywords: Loneliness, relationship quality, culture, mental health, physical health
    JEL: I12 I14 J14 D91 Z13
    Date: 2022
  10. By: Ho, Christine (Singapore Management University)
    Abstract: Whereas the literature has found that elderly parents may use bequests to reward children who provide them with time support, there is limited evidence on whether younger less needy parents may base their intended bequest division on alternative forms of support from children. Using a large-scale dataset of middle-aged and older Singaporeans, I find that parents intend to leave larger bequest shares to coresident children and to children who provide greater material support. Parents also intend to bequeath more to children in whom they confide frequently while they bequeath more to children in whom they rarely confide when the latter give them greater material support. The results suggest that parents may interpret physical and emotional proximity to children as signs of filiality for which they may reward children while detached children may earn such rewards through material support. These findings may have broader implications for both individual and societal well-being.
    Keywords: coresidence; material transfers; filial piety; intended bequest division
    Date: 2021–09–01
  11. By: Manuel Alberto M. Ferreira
    Abstract: The generic case of pensions fund that it is not sufficiently auto financed and it is thoroughly maintained with an external financing effort is considered in this chapter. To represent the unrestricted reserves value process of this kind of funds, a time homogeneous diffusion stochastic process with finite expected time to ruin is proposed. Then it is projected a financial tool that regenerates the diffusion at some level with positive value every time the diffusion hits a barrier placed at the origin. So, the financing effort can be modeled as a renewal-reward process if the regeneration level is preserved constant. The perpetual maintenance cost expected values and the finite time maintenance cost evaluations are studied. An application of this approach when the unrestricted reserves value process behaves as a generalized Brownian motion process is presented.
    Date: 2022–03

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