nep-age New Economics Papers
on Economics of Ageing
Issue of 2023‒03‒27
nine papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Population Aging, Silver Dividend, and Economic Growth By Park, Donghyun; Shin, Kwanho
  2. Optimal Mix Among PAYGO, EET and Individual Savings By Lin He; Zongxia Liang; Zhaojie Ren; Yilun Song
  3. Nursing home aversion post-pandemic: Implications for savings and long-term care policy By Bertrand Achou; Philippe de Donder; Franca Glenzer; Minjoon Lee; Marie-Louise Leroux
  4. Disabilities and Care Needs among Older People: Evidence from Vietnam By Nguyen, Cuong Viet; Nguyen, Quynh Ngoc
  5. Differential health reporting error among older adults in India By Anna Choi; Arnab K. Basu; Nancy H. Chau; T.V. Sekher
  6. Frames, Incentives, and Education: Effectiveness of Interventions to Delay Public Pension Claiming By Franca Glenzer; Pierre-Carl Michaud; Stefan Staubli
  7. Optimal management of DB pension fund under both underfunded and overfunded cases By Guohui Guan; Zongxia Liang; Yi Xia
  8. Early pension withdrawal as stimulus By Steven Hamilton; Geoffrey Liu; Tristram Sainsbury
  9. Immigration, The Long-Term Care Workforce, and Elder Outcomes in the U.S. By David C. Grabowski; Jonathan Gruber; Brian McGarry

  1. By: Park, Donghyun (Asian Development Bank); Shin, Kwanho (Korea University)
    Abstract: While there are growing concerns about population aging, some studies explore the possibility that population aging can give rise to a silver dividend that contributes to economic growth (ADB 2019). While the demographic dividend refers to the increase of the working-age population, the silver dividend points to increased longevity and longer working life as potential sources of growth in an aging society. Extending Lee and Shin (2021) to include developing countries, we examine the potential for a silver dividend by investigating the channels through which population aging affects economic growth. We find that lower total factor productivity growth is the main mechanism through which population aging harms economic growth. Labor shortage caused by population aging is mostly offset by higher labor force participation rates of males, females, and older workers. In particular, the labor force participation rate of the older people increases the most.
    Keywords: aging; growth; labor force participation; total factor productivity; silver dividend
    JEL: E20 J10 J21 O40 O47
    Date: 2023–03–08
  2. By: Lin He; Zongxia Liang; Zhaojie Ren; Yilun Song
    Abstract: In order to deal with the aging problem, pension system is actively transformed into the funded scheme. However, the funded scheme does not completely replace PAYGO (Pay as You Go) scheme and there exist heterogeneous mixes among PAYGO, EET (Exempt, Exempt, Taxed) and individual savings in different countries. In this paper, we establish the optimal mix by solving a Nash equilibrium between the pension participants and the government. Given the obligatory PAYGO and EET contribution rates, the participants choose the optimal asset allocation of the individual savings and the consumption policies to achieve the objective. The results extend the ``Samuelson-Aaron" criterion to age-dependent preference orderings. And we identify three critical ages to distinguish the multiple outcomes of preference orderings based on heterogeneous characteristic parameters. The government is fully aware of the optimal feedback of the participants. It chooses the optimal PAYGO and EET contribution rates to maximize the overall utility of the participants weighted by each cohort's population. As such, the negative population growth rate leads to the decline of the PAYGO attractiveness as well as the increase of the older cohorts' weight in the government decision-making. The optimal mix is the comprehensive result of the two effects.
    Date: 2023–02
  3. By: Bertrand Achou (HEC Montréal - HEC Montréal); Philippe de Donder (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Franca Glenzer (HEC Montréal - HEC Montréal); Minjoon Lee (Carleton University); Marie-Louise Leroux (Département des Sciences Economiques, ESG-UQAM, Montréal, Canada)
    Abstract: COVID-19 outbreaks at nursing homes during the recent pandemic have received ample media coverage and may have lasting negative impacts on individuals' perception of nursing homes. We argue that this could have sizable and persistent implications for savings and long-term care policies. Our theoretical model predicts that higher nursing home aversion should induce higher savings and stronger support for policies subsidizing home care. Based on a survey of Canadians aged 50 to 69, we document that higher nursing home aversion is widespread: 72% of respondents are less inclined to enter a nursing home because of the pandemic. Consistent with our model, we find that these respondents are more likely to have higher intended savings for old age because of the pandemic. We also find that they are more likely to strongly support home care subsidies.
    Keywords: Pandemic risk, Nursing home, Long-term care, Savings, Public policy
    Date: 2022–09
  4. By: Nguyen, Cuong Viet; Nguyen, Quynh Ngoc
    Abstract: In this study, we study disability among older people (aged 60 or older) using the 2016 Viet Nam National Disability Survey. We find that 31% and 12% of older people are living with low and high disabilities, respectively. These rates are remarkably higher than the disability rate identified by local authorities. Disability is found to be more prevalent in older people and women. There is a strong and negative association between education and disability, as well as between wealth and disability. Next, we analyze the need for care among older people with disabilities. We find that around 10% of older people need care, which is equivalent to around 1.2 million people. The proportion of people in need of care is 29% for older people with disabilities and 53.8% for older people with severe disabilities.
    Keywords: Disability, older people, care need, unmet care, Vietnam
    Date: 2023
  5. By: Anna Choi; Arnab K. Basu; Nancy H. Chau; T.V. Sekher
    Abstract: This paper studies the education gradient associated with health reporting errors for two highly prevalent non-communicable diseases among older adults in India. We leverage a novel data set—the Longitudinal Aging Study in India (2017-18) panel survey—to unpack the sources of health reporting error in a developing-country context for the first time.
    Keywords: Education, Health, Panel survey
    Date: 2023
  6. By: Franca Glenzer; Pierre-Carl Michaud; Stefan Staubli
    Abstract: Many people forgo a higher stream of public pension income by claiming early. We provide both quasi-experimental and survey-experimental evidence that the timing of public pension claiming is relatively inelastic to changes in financial incentives in Canada. Using the survey experiment, we evaluate the effect of two different educational interventions and different ways of framing the incentive to delay claiming. While all three types of interventions induce delays, these interventions have heterogeneous financial consequences for participants who react.
    JEL: G53 J26
    Date: 2023–02
  7. By: Guohui Guan; Zongxia Liang; Yi Xia
    Abstract: This paper investigates the optimal management of an aggregated defined benefit pension plan in a stochastic environment. The interest rate follows the Ornstein-Uhlenbeck model, the benefits follow the geometric Brownian motion while the contribution rate is determined by the spread method of fund amortization. The pension manager invests in the financial market with three assets: cash, bond and stock. Regardless of the initial status of the plan, we suppose that the pension fund may become underfunded or overfunded in the planning horizon. The optimization goal of the manager is to maximize the expected utility in the overfunded region minus the weighted solvency risk in the underfunded region. By introducing an auxiliary process and related equivalent optimization problems and using the martingale method, the optimal wealth process, optimal portfolio and efficient frontier are obtained under four cases (high tolerance towards solvency risk, low tolerance towards solvency risk, a specific lower bound, and high lower bound). Moreover, we also obtain the probabilities that the optimal terminal wealth falls in the overfunded and underfunded regions. At last, we present numerical analyses to illustrate the manager's economic behaviors.
    Date: 2023–02
  8. By: Steven Hamilton (George Washington University); Geoffrey Liu (Harvard University); Tristram Sainsbury (Australian National University)
    Abstract: During the COVID-19 pandemic, the Australian government allowed eligible individuals to withdraw up to A$20, 000 (around half median annual wage income) across two tranches from their retirement accounts, ordinarily inaccessible until retirement. Based on historical returns, the modal withdrawal by the modal-aged withdrawer can be expected to reduce their balance at retirement by more than $120, 000 in today's dollars. One in six working-age people withdrew a total of $38 billion (on average, 51% of their balances). These transfers represented a liquidity shock and were much larger than those considered in the literature to date. Using administrative and weekly bank transactions data, we find a high marginal propensity to spend (MPX) given the size of the transfers of at least 0.43 within eight weeks, spread broadly across categories (including around half or more on non-durables) and across withdrawers. The response to the second withdrawal, which two-thirds returned for and which occurred after activity had recovered, was even larger at 0.48. Withdrawal and spending are predicted strongly by numerous measures of poor financial health, high pre-withdrawal rates of cash withdrawal and gambling, and younger age. The MPX of rational, forward-looking but liquidity constrained consumers can be expected to asymptote to zero as the transfer size rises, while that of present-biased consumers can be expected to remain high. Our findings overwhelmingly are consistent with the latter, suggesting roughly 80% of withdrawers were present-biased. In selecting strongly on the present-biased, the program presents a sharp trade-off between effective macroeconomic stimulus and suboptimal retirement saving policy.
    Keywords: Stimulus, retirement saving, marginal propensity to consume, present bias
    JEL: E21 E63 E71 H31 H55 J32
    Date: 2023–02
  9. By: David C. Grabowski; Jonathan Gruber; Brian McGarry
    Abstract: Although debates over immigration remain contentious, one important sector served heavily by immigrants faces a critical labor shortage: nursing homes. We merge a variety of data sets on immigration and nursing homes and use a shift-share instrumental variables analysis to assess the impact of increased immigration on nursing home staffing and care quality. We show that increased immigration significantly raises the staffing levels of nursing homes in the U.S., particularly in full time positions. We then show that this has an associated very positive effect on patient outcomes, particularly for those who are short stayers at nursing homes, and particularly for immigration of Hispanic staff.
    JEL: I11 I18 J61
    Date: 2023–02

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.