nep-age New Economics Papers
on Economics of Ageing
Issue of 2023‒07‒17
thirteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Trust in the financial performance of pension funds, public perception, and its effect on participation in voluntary pension saving plans By Floor Goedkoop; Madi Mangan; Mauro Mastrogiacomo; Stefan Hochguertel
  2. Older Workers and Retirement Security: a Review By Monique Morrissey; Siavash Radpour; Barbara Schuster
  3. Unraveling the Factors Influencing Public Pension Knowledge: Findings from the World's Most Super-Aged Society By Hirao, Tomotaka
  4. From local to national: Delivering and financing effective long-term care By Pietrangelo de Biase; Sean Dougherty
  5. Gender and the Total Work of Older Workers in Asia By Donehower, Gretchen
  6. The Economic and Health Effects of Long-term Care Insurance: New Evidence from Korea By Hoolda Kim; Sophie Mitra
  7. Análisis y recomendaciones sobre las reformas laboral y pensional By Luis Fernando Mejía
  8. Dynamics of Health and Labor Incomes in Korea By Hoolda Kim; Sophie Mitra
  9. High rents increasingly becoming a driver of financial fragility for low-income older households By Eva Conway; Barbara Schuster; Siavash Radpour; Teresa Ghilarducci
  10. Child-rearing, Social Security and Married Women’s Labor Supply over the Life Cycle By Das, Debasmita
  11. At Home versus in a Nursing Home: Long-term Care Settings and Marginal Utility By De Donder, Philippe; Achou, Bertrand; Glenzer, Franca; Lee, Minjoon; Leroux, Marie-Louise
  12. Residential Land Use and Utilities of Multiple Generations with Lifespan Perspectives and Demographic Dynamics By Kono, Tatsuhito; Tsutaki, Keisuke
  13. Exploring perceptions and approaches of registered managers regarding clinical safety in care homes in the UK By Kirkpatrick, Clare; Nyatanga, Brian

  1. By: Floor Goedkoop; Madi Mangan; Mauro Mastrogiacomo; Stefan Hochguertel
    Abstract: We investigate the determinants of trust in one’s pension fund and the effect of trust on the decision to ensure additional pension savings. Our analysis is based on exogenous shocks arising from pension cuts and indexation, and on how these are perceived. These instruments allow identifying the effect of trust in pension funds on participation in voluntary pension saving plans. We disentangle the effects of age, birth cohort, and time in the determination of trust, and counter previous findings of a positive age gradient with trust. This implies that in the future the general level of trust in pension funds will decline. This study also finds a positive effect of trust on additional pension savings. Hence, the positive correlation found in previous studies can be interpreted as causal. Lastly, we contribute to the current debate on self-employment and retirement preparation. Our findings suggest that the decision to become self-employed and to arrange one’s own pension savings is likely not driven by the desire to exit the occupational pension system, as those who make additional pension savings arrangements — including self-employed workers — in fact trust their pension fund.
    Keywords: Trust; additional pension savings; cohort-time effect; self-employment
    JEL: G51 J32
    Date: 2023–06
  2. By: Monique Morrissey; Siavash Radpour; Barbara Schuster (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: This article documents risks and disparities among older workers in the labor force and in retirement preparedness and explores the links between labor market challenges facing older workers and retirement insecurity. We use survey data from the Current Population Survey (CPS), the Health and Retirement Study (HRS), and the Survey of Consumer Finances (SCF) to update and expand upon previous research on issues including retirement plan coverage and retirement account balances, as well as older workers’ labor force participation and employment, job quality, and job security. We show that while many older workers have little to nothing saved for retirement and cannot afford to retire, the advances in their employment prospects and job quality have been slow and unequal. Our findings reframe improving access to decent jobs as a complement to, rather than substitute for, retirement readiness.
    Keywords: older workers, retirement readiness, working conditions, bargaining power
    JEL: J14 J26 J81
  3. By: Hirao, Tomotaka (Setsunan University)
    Abstract: Understanding public pension schemes is crucial for effective pension reforms in advanced countries. However, despite Japan having the fastest ageing population in the world, there is limited research regarding people's actual levels of understanding of public pensions and their determinants. This study focuses on the knowledge of Japanese individuals who contribute to the pension system and future pensioners, as they play a key role in sustaining the Japanese public pension system. Public pension knowledge is examined in terms of test reliability and validity; the determinants are then analysed after controlling for individual-specific effects. The empirical results showed that the average number of correctly answered questions regarding Japanese public pensions was approximately 33%. This outcome is suboptimal because it shows that participants exhibited less-than-ideal levels of basic pension knowledge despite their contributions to the public pension system. This study also confirms that there are positive correlations between some independent variables regarding education and the level of public pension knowledge. The results suggest that education could be a potential policy tool to enhance pension knowledge and maintain a robust public pension system.
    Date: 2023–06–11
  4. By: Pietrangelo de Biase; Sean Dougherty
    Abstract: This study provides an in-depth examination of the fiscal and governance decentralisation of long-term care (LTC) across OECD countries, offering projections of future fiscal burdens of LTC spending across levels of government. With rapid population ageing and a decrease in the supply of informal care, LTC spending has increased significantly. The paper introduces a novel methodology to estimate LTC expenditures across different government levels, including central and subnational governments. By analysing country cases, it explores the responsibilities assigned to each government level and the implications for service delivery and intergovernmental coordination. The study also discusses the overall anticipated increase of LTC expenditure to 2.3% of GDP by 2040, identifying the most impacted countries. This research contributes to our understanding of LTC systems, highlights the challenges of increasing LTC costs and provides insights for optimising governance and fiscal expenditure.
    Keywords: fiscal federalism, health accounts, long-term care, population ageing, social care
    JEL: H51 H77 I18 J11
    Date: 2023–07–05
  5. By: Donehower, Gretchen (University of California at Berkeley)
    Abstract: In Asia, aging countries with slow population growth worry about a lack of workers in the future and see older people’s labor as a potential solution. However, this leaves out the work that many older people already do—unpaid care work. Drawing on data from Bangladesh, India, Mongolia, and Thailand, the estimates in this paper show that older people, especially older women, are doing a great deal of work caring for others. In this case, policies that aim to increase overall market labor force effort by increasing the market labor of older people may underachieve their goals if they do not account for the older people’s unpaid care work responsibilities. Finally, we use the estimates of the older people’s unpaid care work to think about investments in the paid care economy that might be needed to replace unpaid care work of the older people if they increase labor market effort but not total work. These simple calculations indicate that the scale of investment required is manageable.
    Keywords: older workers; unpaid care work; care economy; labor supply
    JEL: J13 J14 J22
    Date: 2023–06–23
  6. By: Hoolda Kim (Black Hills State University, School of Business); Sophie Mitra (Fordham University, Department of Economics)
    Abstract: With a rapidly aging global population, Long Term Care Insurance (LTCI) for older people is a pressing policy issue. While long-term care services are designed to assist people with limited functional ability, the breadth of coverage considerably varies from country to country. There is a debate on the costs of such programs and the adequacy of benefits. Understanding the impacts of LTCI programs is central to informing LTCI policies as few countries have embraced them. In 2008, the Korean government initiated a national public contributory LTCI program to help older people lead more independent and secure lives and support family caregivers. We use the Korean Welfare Panel Study (KOWEPS) and a difference-in-differences model combined with propensity score matching to assess the effect of the program on self-rated health, healthcare utilization, household expenditures, and savings. While older adults in beneficiary households tend to have better self-rated health and receive fewer regular health check-ups, those with inpatient visits tend to stay longer in the hospital compared to those in non-beneficiary households. We find that LTCI beneficiary households have lower savings and higher out-of-pocket healthcare expenses compared to non-beneficiary households. Overall, results suggest a positive effect of LTCI on self-rated health but detrimental effects on household out-of-pocket healthcare expenses and savings for those with less comprehensive health insurance coverage, the near-poor, and older singles. LTCI requires further research and policy attention in Korea and beyond.
    Keywords: Long term care, expenditures, saving, health, health insurance, older population, Korea
    JEL: I13 I38
    Date: 2023
  7. By: Luis Fernando Mejía
    Abstract: El Gobierno nacional ha presentado sus propuestas de reformas en el frente laboral y pensional. Estas dos reformas deben examinarse de forma integral, ya que la muy baja cobertura del sistema obligatorio de pensiones actual (25%) se debe principalmente a la alta informalidad laboral (actualmente en un 58% de la población ocupada). En este sentido, los objetivos de aumentar la cobertura pensional y reducir la informalidad laboral son dos caras de una misma moneda: no será posible mejorar la cobertura en el sistema obligatorio de pensiones si no se hacen esfuerzos para reducir la informalidad laboral. Este documento realiza un análisis de los elementos más importantes de las reformas laboral y pensional, considerando sus impactos, aspectos positivos y negativos, y presenta recomendaciones específicas que podrían mejorar sustancialmente la eficiencia y eficacia de los resultados que se pretenden alcanzar con las reformas.****** Abstract: The national government has put forth proposals for comprehensive labor and pension reforms. These reforms need to be considered together, as the low coverage of the current mandatory pension system (25%) is primarily due to the high prevalence of labor informality (currently at 58% among the employed population). Therefore, the objectives of increasing pension coverage and reducing labor informality are interconnected: improving pension coverage in the mandatory system would require efforts to reduce labor informality. This document provides an analysis of the key elements of the labor and pension reforms, including their impacts, positive and negative aspects, and specific recommendations to substantially enhance the efficiency and effectiveness of the intended outcomes of these reforms.
    Keywords: Reforma Laboral, Reforma Pensional, DesempleoInformalidad, Labor ReformPension Reform, UnemploymentInformality
    JEL: J08 H53 H55
    Date: 2023–03–30
  8. By: Hoolda Kim (Black Hills State University, School of Business); Sophie Mitra (Fordham University, Department of Economics)
    Abstract: This study aims to better understand the causal links between health and labor income among middle-aged and older adults. Much of the literature on health and employment consists of studies using data on young or working-age adults for the United States and European countries. This study focuses on Korean middle-aged and older adults (ages 45 to 74 years) and uses dynamic panel data models. With 12 waves of the Korea Welfare Panel Study collected from 2006 to 2017, we consider the heterogeneity of the results across demographic and socioeconomic groups. The sample is stratified by gender, age, urban-rural areas, poverty status, and marital status. Health is measured through self-reported health status. For middle-aged and older Koreans, better health is found to contribute to higher labor income for both men and women, particularly among married couples, the poor, and individuals aged 55 to 64. Labor income appears to benefit men’s health only, mainly those aged 65 to 74.
    Keywords: Health, Labor Income, Aging, Korea, Dynamic Panel Data Model
    JEL: I12 I31 J14 J16
    Date: 2023
  9. By: Eva Conway; Barbara Schuster; Siavash Radpour; Teresa Ghilarducci (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: Outside of Social Security, housing equity is the primary mechanism for accumulating wealth in the United States, and indeed, 73 percent of households over 65 own their home.1 It may therefore come as a surprise that more than a quarter of households with a member between the ages of 55 and 64 in the bottom half of the income distribution face housing-related financial fragility. Middle- and high-income households are not exempt from the risk of financial fragility due to housing costs and debt, though many of these households own their own homes. Among these groups, 10.3 and 6.4 percent, respectively, face high housing costs and debt burdens (see Figure 1). What’s more, the share of older low-income households facing housing-related financial fragility has increased steadily; between 2013 and 2020, the share of low-income older households who had to pay rent exceeding 30 percent of their income increased from 18.2 percent to 23.7 percent (See Figure A1 in the Appendix for details).
    Keywords: Financial fragility, low-income, Workers, Jobs, Renting, Risk, Older workers, debt, retirement, retirement savings, emergency savings
    JEL: E24 I14 J62 J38 E21 J83 J32
    Date: 2023–06
  10. By: Das, Debasmita
    Abstract: This paper studies how career interruptions during child-rearing years affect the labor market trajectory, lifetime earnings, and Social Security benefits of married women in the United States. To this end, I develop a dynamic structural life-cycle model of female labor supply, savings, and Social Security benefit claiming and estimate the model using the Method of Simulated Moments for the 1943-1954 birth cohort. Utilizing the estimated model, I evalu- ate the effects of revenue-neutral introduction of the Social Security Caregiver Credits that cover lost earnings during early child-rearing years through change in retirement benefits. The model predicts that introducing the provision of earning credits for child care in the Social Security system would lead to a sizeable reduction in gender gap in average career earnings at the Social Security Early Retirement Age. The findings suggest that instituting caregiver credits for child-rearing in the absence of the marriage-based Social Security ben- efits would offset a substantial portion of the motherhood penalty in lifetime labor earnings of married women and increase their retirement benefit adequacy.
    Keywords: Caregiver Credit, Female Labor Supply, Life-cycle Model, Social Security
    JEL: D14 E21 H55 I38 J13 J21 J26
    Date: 2022–08–04
  11. By: De Donder, Philippe; Achou, Bertrand; Glenzer, Franca; Lee, Minjoon; Leroux, Marie-Louise
    Abstract: Marginal utility of financial resources when needing long-term care, and the related incentives for precautionary savings and insurance, may vary significantly by whether one receives care at home or in a nursing home. In this paper, we develop strategic survey questions to estimate those differences. All else equal, we find that the marginal utility is significantly higher when receiving care at home rather than in a nursing home. We then use these estimates within a quantitative life cycle model to evaluate the impact of the expected choice of care setting (home versus nursing home) on precautionary savings and insurance valuation. The estimated marginal utility differences imply a significant increase in the incentives to save when expecting to receive care at home. Larger incentives to self-insure also translate to a higher valuation of additional subsidies for home care than for nursing homes, shedding light on an efficient way to expand public long-term care subsidies. We also examine how the magnitude of our results quantitatively varies with the existing public long-term care subsidies
    Keywords: Long-term Care; Marginal Utility; Home Care; Nursing Home; Savings
    JEL: D14 E21 G51 I0
    Date: 2023–06–06
  12. By: Kono, Tatsuhito; Tsutaki, Keisuke
    Abstract: Demographic dynamics and spatial distribution of urban amenities bring about spatially different benefits to young, middle-aged, and elderly people, thereby affecting residential location patterns. Using an overlapping generations model in a closed city with two zones with different amenity levels, we demonstrate how young, middle-aged, and elderly generations with lifespan perspectives reside in the two zones with their interplay across periods and locations and analyze the residents’ welfare levels. We find that, unlike a static situation, there is no steady residential pattern in which middle-aged or elderly households live in both of the two zones when they optimize their residential locations throughout their life. Our numerical simulation reveals two findings useful for policy making: first, urban amenities should be unevenly distributed across the city from a perspective of lifetime utility; second, different demographic changes lead to different desirable residential patterns in terms of utility. Finally, we check the robustness of these findings for the case of the expansion of remote work.
    Keywords: Urban land use, Overlapping generations model, Urban amenities, Demographic dynamics
    JEL: H4 R0 R28
    Date: 2023–06
  13. By: Kirkpatrick, Clare; Nyatanga, Brian
    Abstract: Context: Around 400, 000 people currently live in care homes with increasing complexity of care needs and comorbidities. Despite this, there is a paucity of research that asks questions about how the care and clinical safety of this vulnerable population are managed. Objective: The aim of this research was to understand how registered care home managers approach clinical safety and what they feel helps or hinders them in this. Methods: The research took a Heideggerian interpretative phenomenological approach, embracing the closeness of the researcher to the participants and the subject matter to uncover rich and detailed findings. Five registered managers of care homes owned by one provider participated in semi-structured interviews between March and May 2020. Three of the interviews took place in the managers’ care homes, and, due to coronavirus restrictions, two were undertaken via video conferencing software. Findings: Thematic analysis of the data generated unexpected findings demonstrating the significant impact on clinical safety in care homes caused not by the managers themselves, but by external forces, including regulation, shortcomings in the structure of the health and social care system in the UK and complex relationships between care homes and other agencies. Limitations: The strengths (e.g., in-depth data) and limitations (e.g., only including care homes in one area) of this phenomenological qualitative study are discussed. Implications: The findings led to recommendations that further research and reviews should be undertaken urgently to understand these factors in more detail. This would provide valuable guidance to inform system-wide reform to ensure better clinical safety for care home residents.
    Keywords: nursing homes; care homes; leadership
    JEL: J50
    Date: 2023–05–10

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