nep-age New Economics Papers
on Economics of Ageing
Issue of 2023‒02‒06
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Health-Consumption Effects of Increasing Retirement Age Late in the Game By Eve Caroli; Catherine Pollak; Muriel Roger
  2. Target Retirement Fund: A Variant on Target Date Funds that uses Deferred Life Annuities rather than Bonds to Reduce Risk as Retirement Approaches By John B. Shoven; Daniel B. Walton
  3. Home alone: Widows' well-being and time By Maja Adena; Daniel Hamermesh; Michał Myck; Monika Oczkowska
  4. Unpleasant Actuarial Arithmetic: Fair Contribution Rates for Defined Benefit Pension Schemes By Kenjiro Hori; Stephen Wright
  5. Pension Reforms, Longer Working Horizons and Absence from Work By Brunello, Giorgio; De Paola, Maria; Rocco, Lorenzo
  6. Child Gender and Subjective Well-being of Older Parents in China By Lei, Lei; Wu, Fengyu; Xia, Yiming
  7. A Framework for Macroprudential Stress Testing By Morell, Joe; Rice, Jonathan; Shaw, Frances
  8. El futuro del envejecimiento: Opciones de política pública By Sosa, Zulma; Gunnarsson, Jóna; González Rodríguez Villamil, Cecilia E.
  9. Demographic Observatory of Latin America and the Caribbean 2022. Population trends in Latin America and the Caribbean: Demographic effects of the COVID-19 pandemic By -
  10. Gazing at r-star: A Hysteresis Perspective By Paul Beaudry; Katya Kartashova; Césaire Meh

  1. By: Eve Caroli (Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Catherine Pollak (DREES - Centre de Recherche du DREES - Ministère de l'Emploi et de la Solidarité, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Muriel Roger (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Using the differentiated increase in retirement age across cohorts introduced by the 2010 French pension reform, we estimate the health-consumption effects of a 4-month increase in retirement age. We focus on individuals who were close to retirement age but not retired yet by the time the reform was passed. Using administrative data on individual sick-leave claims and nonhospital health-care expenses, we show that the probability of having at least one sickness absence increases for all treated groups, while the duration of sick leaves remains unchanged.Delaying retirement does not increase the probability of seeing a GP, except for men in the younger cohorts. In contrast, it raises the probability of having a visit with a specialist physician for all individuals, except men in the older cohorts. Delaying retirement also increases the probability of seeing a physiotherapist among women from the older cohorts. Overall, itincreases health expense claims, in particular in the lower part of the expenditure distribution.
    Keywords: Pension reform, Retirement age, Health, Health-care consumption
    Date: 2022–12–15
  2. By: John B. Shoven; Daniel B. Walton
    Abstract: This paper evaluates a new variant of the popular target date funds used in employer-based retirement savings plans. We call this new variant a “target retirement plan.” Instead of increasing the allocation to bond funds as retirement approaches, a target retirement fund gradually purchases deferred life annuities beginning at age 50. In the particular straw model target retirement fund examined in the paper, the defined contribution participant makes deferred life annuity purchases at ages 50, 52, 54, 56, 58, 60 and 62. We compare how a target retirement fund participant would fare compared with someone who stays with a traditional TDF until retirement and then buys an immediate life annuity. We examine 1, 000 possible 30-year futures for stock returns, bond fund returns and Treasury interest rates. The main result from this paper is that buying a retirement annuity in advance (by accumulating deferred life annuities) is superior to sticking with a Target Date Fund until retirement and then buying an immediate annuity in most scenarios of future stock returns, interest rates and bond returns.
    JEL: G11 G22 J14 J26
    Date: 2023–01
  3. By: Maja Adena (Wissenschaftszentrum Berlin (WZB), 10785 Berlin, Germany); Daniel Hamermesh (University of Texas at Austin, Austin, TX, 78712, USA); Michał Myck (Centre for Economic Analysis, 71441 Szczecin, Poland); Monika Oczkowska (Centre for Economic Analysis, 71441 Szczecin, Poland)
    Abstract: Using data from the Survey of Health, Ageing and Retirement in Europe (SHARE, 2004-17) and time diaries from Poland (2013), the U.S. (2006-16), the U.K. (2014-15) and France (2009-10), we examine differences between widowed and partnered older women in well-being and its development in widowhood. Most importantly, our analysis accounts for time use, an aspect which has not been studied previously. We trace the evolution of well-being of women who become widowed by comparing them with their matched non-widowed ‘statistical twins’ and examine the role of an exceptionally broad set of potential moderators of widowhood’s impact on well-being. We confirm a dramatic decrease in mental health and life satisfaction after the loss of partner, followed by a slow partial recovery over a five-year period. An extensive set of controls recorded prior to widowhood, including detailed family ties and social networks, provides little help in explaining the deterioration in well-being. Unique data from time-diaries kept by older women in several European countries and the U.S. tell us why: the key factor behind widows’ reduced well-being is increased time spent alone.
    Keywords: widowhood; well-being; social networks; time use;
    JEL: I31 I19 J14
    Date: 2023–01–20
  4. By: Kenjiro Hori (Birkbeck, University of London); Stephen Wright (Birkbeck, University of London)
    Abstract: We derive key properties of the actuarially fair contribution rate for defined benefit (DB) schemes, that equates scheme assets to liabilities for any given scheme member. The unpleasant actuarial arithmetic of both increased life expectancy and (especially) negative real yields has resulted in a massive rise in the fair contribution rate over recent decades. At present there appears to be little prospect of these rises being reversed. We analyse the implications for the viability of DB schemes, and consider the (potentially significant) impact of incorporating systematic risk into benefits.
    Keywords: defined benefit, pension contribution rate
    JEL: J32
    Date: 2022–02–22
  5. By: Brunello, Giorgio (University of Padova); De Paola, Maria; Rocco, Lorenzo (University of Padova)
    Abstract: Using matched employer-employee data for Italy and newly available information on sick leaves certificates, we study the effect of an exogenous increase in the length of the residual work horizon – triggered by a pension reform that increased minimum retirement age - on middle-aged employees' absence from work due to sick leaves. We find that this effect is positive for females and negative for males. After excluding health as a plausible mechanism, we argue that the intertemporal substitution of leisure prevailed on the fear of job loss for females, while the opposite happened to males. Sick leaves increased only for females working in firms paying smaller wage premia to female than to male workers, suggesting that, in these firms, females exchange lower pay with higher flexibility in their work schedule.
    Keywords: absences from work, retirement, Italy
    JEL: J22 J26
    Date: 2023–01
  6. By: Lei, Lei; Wu, Fengyu; Xia, Yiming
    Abstract: In many societies, parents prefer sons over daughters, but the well-being effects of child gender, especially in later life, are less studied. Using the latest two waves of the China Health and Retirement Longitudinal Study (CHARLS), this paper evaluates the impacts of having daughters on older parents' subjective well-being (SWB) in China, which has a rapidly aging population and the traditional preference for sons. Studying the cohort of parents whose child gender is as good as random, we find that having more daughters promotes older parents' SWB, especially overall life satisfaction, satisfaction with health, and satisfaction with children. Our results suggest that the increase in SWB is achieved through better health, more financial support from daughters, more spending on leisure and a lower probability of working. The positive SWB effects of daughters are found to be more salient among more vulnerable groups, including those who are older, less educated, and with fewer children.
    Keywords: Subjective Well-being, Child Gender, Older Parents, China, Life Satisfaction, Domain Satisfaction
    JEL: I31 J14 J16
    Date: 2023
  7. By: Morell, Joe (Central Bank of Ireland); Rice, Jonathan (Central Bank of Ireland); Shaw, Frances (Central Bank of Ireland)
    Abstract: Demographic dynamics and the shift of population pyramids towards an inverted pyramid shape in advanced economies are leading to relative scarcity of labour and excess savings. What are the effects of these dynamics on the relative wealth accumulation journeys of different cohorts? Within a fixed-effect cross country panel framework, I find that savings by an increasing share of households aged between 45 and 65, a rise in retired over-65s, and a decrease in working-age and low-wealth agents in their twenties and thirties can explain most of the decline in rates of return across countries in the last few decades, and similarly a large part of the increase in wages. In this context and looking to the future, wealth accumulation out of income and capital returns by cohorts living in advanced economies and retiring in future decades is set to become increasingly difficult, as higher wages are not sufficient to compensate for lower returns over long periods of time. Current young and future generations are therefore set to face progressively lower standards of living at retirement and/or increasingly high saving ratios in working age.
    Keywords: macroprudential stress testing, capital buffers, scenario analysis.
    JEL: E37 E58 G21
    Date: 2022–11
  8. By: Sosa, Zulma; Gunnarsson, Jóna; González Rodríguez Villamil, Cecilia E.
    Abstract: A partir de la metodología de las Cuentas Nacionales de Transferencia (CNT), este documento presenta nueve estudios nacionales (Argentina, Estado Plurinacional de Bolivia, Brasil, Chile, Colombia, Costa Rica, El Salvador, México y Perú) que analizan los cambios en la estructura etaria de la población y presentan escenarios ilustrativos, con opciones de políticas públicas para hacer frente a los desafíos del envejecimiento, centradas en: extensión de la vida laboral, eliminación de la brecha de género en materia de ingreso laboral, aumento de los impuestos e inversión en educación, para aumentar los años de escolaridad.
    Date: 2022–12–07
  9. By: -
    Abstract: The 2022 edition of the Demographic Observatory offers selected indicators of population estimates and projections for 38 countries and territories in Latin America and the Caribbean. The estimates and projections were prepared by CELADE in conjunction with the United Nations Population Division (UNPD) for the 20 countries of Latin America; those for the 18 Caribbean countries and territories were prepared by UNPD. This new release updates previously published figures and uses the cohort component method by single ages and calendar years, unlike the 2019 edition, which was prepared for years ending in 0 and 5 and for age groups. The data for national population estimates and projections for the countries of Latin America and the Caribbean is available on the ECLAC website ( figures included in this edition of the Demographic Observatory, as well as the eight variant population projections prepared by the United Nations Population Division, are available on the Division’s website (
    Date: 2022–11–17
  10. By: Paul Beaudry; Katya Kartashova; Césaire Meh
    Abstract: Many explanations for the decline in real interest rates over the last 30 years point to the role that population aging or rising income inequality plays in increasing the long-run aggregate demand for assets. Notwithstanding the importance of such factors, the starting point of this paper is to show that the major change driving household asset demand over this period is instead an increased desire—for a given age and income level—to hold assets. We begin by presenting a simple explanation for this pattern that relies on integrating retirement and inter-temporal substitution motives in saving decisions. We then show how the interaction of these two saving motives can have profound implications in terms of the shape of asset demands, the possibility of multiple steady state real interest rates, and a potential role for monetary policy to influence the long-run evolution of real rates. The framework highlights how an inflationary episode followed by a strong monetary response, as we are currently witnessing, can have long-term implications for real interest rates.
    Keywords: Economic models; Fiscal policy; Inflation and prices; Inflation targets; Interest rates; Monetary policy; Monetary policy framework
    JEL: E21 E52 E31 E43 E58 E62 G51 H6
    Date: 2023–01

This nep-age issue is ©2023 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.