nep-age New Economics Papers
on Economics of Ageing
Issue of 2022‒09‒12
eleven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Health and quality of life in aging populations: A structural equation modeling approach By Chiara Costi
  2. Is the Adjustment of Social Security Benefits Actuarially Fair, and If So, for Whom? By Irena Dushi; Leora Friedberg; Anthony Webb
  3. New Evidence on the Demand for Advice within Retirement Plans By Jonathan Reuter; David P. Richardson
  4. Funding the future: The impact of population ageing on revenues across levels of government By Sean Dougherty; Pietrangelo de Biase; Luca Lorenzoni
  5. Family Bargaining and the Gender Gap in Informal Care By Chiara Canta; Helmuth Cremer
  6. Sandwiched women: Health behavior, health, and life satisfaction By Kartseva, Marina; Peresetsky, Anatoly
  7. The Impact of Health on Wealth: Empirical Evidence By Ghimire, Umesh
  8. Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes By Gerard Domènech-Arumí; Silvia Vannutelli
  9. Negative Supply Shock and Labor Mobility By Kimiko Terai
  10. Impact of Population Ageing on Japan's Inter-Prefectural Migration: A Spatial Econometrics Analysis By SIMON CONSALVO
  11. Social protection for working-age women in Tanzania: Exploring past policy trajectories and simulating future paths By Roosa Lambin; Milla Nyyssölä; Alexis Bernigaud

  1. By: Chiara Costi (Lancaster University)
    Abstract: Higher life expectancy and lower fertility rates are changing the global population structure, leading to a fast-growing aging society. To face this societal challenge, governments worldwide are increasing public expenditures focusing on healthy aging. The objective of these investments is to increase quality of life among older people. However, there is a lack of studies focused on understanding the extent to which a wide range of demographic, socioeconomic, and health characteristics are associated with quality of life in advanced ages. Therefore, the objective of this presentation is to explore the role of a variety of factors toward quality of life, with a particular focus on health. Structural equation modeling (SEM) is employed using Stata 16 to explore these associations, using data drawn from the Survey of Health, Ageing and Retirement in Europe (SHARE). Contrary to many studies that use self-assessed single-item questions or additive indices to measure unobserved concepts, such as health and quality of life, this presentation models such constructs as latent variables. Moreover, a minor contribution of this presentation is to employ standard statistical techniques using additive indices along with the main SEM estimation. As the theory predicts, estimates found with additive indices are downward biased compared with latent variables, but so far, there are no studies showing this empirical exercise. The overall findings suggest that nonpecuniary factors, especially physical health status and participating in social activities, play a larger role in enhancing quality of life in advanced age compared with pecuniary factors such as income and financial assets. Therefore, greater attention should be paid on non-economic factors to enrich quality of life among an increasingly aging population.
    Date: 2022–08–01
  2. By: Irena Dushi; Leora Friedberg; Anthony Webb (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: Disparities in Social Security claim ages have risen since the early 1990s. With high earners increasingly likely to delay claiming, and also living longer on average than lower earners, late claimants may differ in critical ways from early claimants. Using Social Security Administration data and focusing on men, we find that late claimants have lower mortality than those who claim at age 62, so late claimants are adversely selected. As a result of selective claiming combined with improvements in actuarial adjustments, the return to delaying claiming has become systematically positive for those who actually delay, but not for those who claim early. We further find that selective claiming increases benefits by more for those with higher lifetime earnings because their return to delay exceeds actuarially fair amounts by larger margins. Lastly, we find that selective claiming has a modest effect on total payouts, but a more consequential effect on inequality in lifetime benefit payouts. In the aggregate, the increase in Trust Fund payouts as a result of adverse selection in claiming was 0.5% for the most recent retiring cohorts. Yet, lifetime benefit payouts are 1.9% higher for those in the highest quartile of lifetime earnings as a result of claim-age differences, compared to what payouts would be if they had the same claim ages as those in the lowest quartile, and this contributes 2.8% to the difference in expected lifetime benefits between the highest and lowest quartiles.
    Keywords: older workers, social security, benefits, downward mobility, poverty, unemployment, wages, involuntary retirement, retirement, 401k, Medicare, Older Workers Bureau, disparities, inequality, income inequality
    JEL: E24 J30 J38 J60 J88 J58
    Date: 2021–09
  3. By: Jonathan Reuter; David P. Richardson
    Abstract: We study demand for advice within defined contribution retirement plans offered by 23 institutions where TIAA is sole recordkeeper. Advice seeking increases with age, account balance, annual contribution level, web access, and changes in marital status. More provocatively, participants who invest solely through target date funds—the dominant default investment option—are significantly less likely to seek any form of advice throughout the age distribution, raising the possibility that reliance upon defaults crowds out advice seeking. Advice seeking increases significantly following the introduction of online tools, but is only weakly correlated with market returns and investment menu changes.
    JEL: G11 G51
    Date: 2022–07
  4. By: Sean Dougherty; Pietrangelo de Biase; Luca Lorenzoni
    Abstract: Government revenues may be affected by economic growth and changes in demographics over time. The effect of economic growth can be captured by long-run buoyancy – responsiveness of government revenues to GDP growth – while the demographic effect can be captured by changes in labour income, asset income and consumption patterns over the life cycle, as well as population growth. This paper attempts to quantify the effect of population ageing on OECD tax revenues across different levels of government, by estimating error correction models of revenue buoyancies over the 1990 to 2018 period, by type of revenue, country and level of government. Multiple scenarios are used for the projections to 2040, which are combined with scenarios for the evolution of revenue bases using newly harmonized EU and UN National Transfer Accounts data as well as OECD Population Projections.
    Keywords: demographics, fiscal federalism, intergovernmental relations, revenue buoyancy, tax policy
    JEL: H20 H71 J11
    Date: 2022–08–30
  5. By: Chiara Canta; Helmuth Cremer
    Abstract: We study the optimal long-term care policy when informal care can be provided by children in exchange for monetary transfers by their elderly parents. We consider a bargaining model with single-child families. Daughters have a lower labor market wage and a lower bargaining power within the family with respect to sons. Consequently, they provide more informal care and have lower welfare in the laissez-faire (although not necessarily lower transfers). The first best involves redistribution from families with sons to families with daughters and can be implemented by a gender-specific schedule of public LTC benefits and transfers to working children. If the policy is restricted to be gender neutral, we find that the informal care provided by daughters should be distorted up to enhance redistribution from families with sons to families with daughters. Transfers within the family should be distorted in both types of families.
    Keywords: long-term care, informal care, strategic bequests, family bargaining, gender-neutrality
    JEL: D13 H23 H31 I19
    Date: 2022
  6. By: Kartseva, Marina; Peresetsky, Anatoly
    Abstract: In this paper, we use unique nationally representative data from the 25th wave of Russia Longitudinal Monitoring survey, (RLMS-HSE) for 2016. Based on the survey data, we investigate the impact of sandwich generation caregiving on the health behavior of Russian women—their health behavior, self-assessed health and life satisfaction. We found that sandwich generation caregiving reduces the likelihood of medical examinations, and regular meals, the effect is especially pronounced for working women. A small reduction in alcohol consumption is observed. The likelihood of smoking is reduced (especially for women under 50). The likelihood of being overweight increases, the proportion of chronic diseases decreases, and self-assessed health improves (these effects are especially pronounced for women who are non-pensioners). The proportion of depression decreases. These effects may be the result of an inattentive attitude to one's health and a consciousness of the social significance of fulfilling one's duty. The latter also affects the decreasing number of sandwich generation givers (SGC) dissatisfied with life in general.
    Keywords: sandwich generation; sandwich caregiving; Russia; female caregivers; health; health behavior; life satisfaction; informal care
    JEL: I12 I31 J14 J16
    Date: 2022–01
  7. By: Ghimire, Umesh
    Abstract: This paper empirically evaluates the impact of health on wealth among the adults between age 50 and 100 in the Unite States. Using the frailty index as a measure of health and carefully accounting for the dynamic relationship between frailty and health, I find that suffering one more health deficit leads, on average, to approximately 2.23 percent decline in the net worth of American households. The impact is significantly negative among the individuals over the age of 70, in poor health, in retirement, and without a college degree. The results are robust across several alternative definitions of wealth such as housing wealth, non-housing wealth, and financial wealth. I find that poor health has the largest impact on financial wealth and the smallest impact on housing wealth. The impact of wealth on frailty is insignificant.
    Keywords: Health, Wealth
    JEL: D31 I14
    Date: 2022–07–21
  8. By: Gerard Domènech-Arumí; Silvia Vannutelli
    Abstract: We exploit an unanticipated labor market reform in 2012 Spain to estimate the effects of pro-cyclical changes in long-term unemployment assistance (UA). The reform raised the minimum age to receive unlimited-duration UA from 52 to 55. Using a difference-in-differences design, we document that shorter benefits caused (i) shorter non-employment duration, especially among younger workers; (ii) higher labor force exit and other programs' take-up, especially among older workers; (iii) lower re-employment wages. The reform induced moderate government savings. Our results highlight how considering the interplay with labor market conditions is crucial when designing long-term benefit schedules affecting workers close to retirement.
    JEL: J31 J64 J65
    Date: 2022–07
  9. By: Kimiko Terai (Keio Economic Observatory, Keio University)
    Abstract: *Firms obtain monopsony power by inducing employees to invest in firm-specific human capital. *By committing to seniority-based wage system, the firm can make employees to make high effort in accumulating firm-specific human capital. *The seniority-based wage system reduces labor mobility, which would harm the firm when the firm faces a negative supply shock. *With enhanced portability of corporate pensions and the reform in taxation on retirement benefits, labor mobility can be resumed, which profits the firm and increases production.
    Keywords: supply shock; retirement benefits; firm-specific human capital; senioritybased wage system; labor mobility
    JEL: J24 J26 J32
    Date: 2022–08–04
    Abstract: This paper examines the impact that the decline in the Japanese population has had on its interprefectural migration flows over the last 15 years. The early 2000s saw the number of internal migrants consistently decrease, reaching all-time low records in both intra and inter-prefectural migration. Economic inequalities between cities and other regions began to shrink in the 1970s due to the indirect effects of the post Second World War's so-called "economic miracle". Also, after 2003, such disparities between metropolitan and rural areas further intensified due to an increase in the income gap, as Japan recorded the start of an aging society phenomenon. How the prefecture's socio-economical and healthcare characteristics are affecting the flow of migration will be examined through spatiotemporal autoregressive models.
    Date: 2022–08
  11. By: Roosa Lambin; Milla Nyyssölä; Alexis Bernigaud
    Abstract: Tanzania has expanded its social protection framework significantly over the past decade, but the country continues to grapple with important gender inequalities. This paper examines, first, the evolution and effects of Tanzania's social protection policies since the 2000s, from the perspective of working-age women.
    Keywords: Social protection, Tanzania, Women, Gender, Microsimulation, Insurance, Social assistance, Gender equality
    Date: 2022

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