nep-age New Economics Papers
on Economics of Ageing
Issue of 2023‒09‒04
nine papers chosen by
Claudia Villosio, LABORatorio R. Revelli

  1. Population Aging, Retirement, and Aggregate Productivity By Klaus Gründler; Niklas Potrafke
  2. MANDATORY PENSION SAVINGS IN RUSSIA: EXPERIENCE AND PROSPECTS By Abramov, Alexander (Абрамов, Александр); Radygin, Alexander (Радыгин, Александр); Chernova, Maria (Чернова, Мария)
  3. Climate Migration Amplifies Demographic Change and Population Aging By Hauer, Mathew
  4. Tightening access to early retirement: who can adapt? By Bernhard Boockmann; Martin Kroczek; Natalie Laub
  5. Mapping Australia’s older, low-income renters By Barrie, Helen; Cebulla, Andreas; Lange, Jarrod; Faulkner, Debbie; Sharam, Andrea
  6. Iceland: Financial Sector Assessment Program-Technical Note on Pension Fund Regulation and Supervision By International Monetary Fund
  7. Inquiry into housing policies and practices for precariously housed older Australians By Faulkner, Debbie; Sharam, Andrea; James, Amity; Tually, Selina; Barrie, Helen
  8. The socio political demography of happiness By Peltzman, Sam
  9. On the authenticity of “the oldest human” Jeanne Calment By Zak, Nikolay; Gibbs, Philip

  1. By: Klaus Gründler; Niklas Potrafke
    Abstract: Most industrialized countries today are facing historical demographic changes, paring increasing retirement with a declining labor force. We study the consequences of an increasing pensioner-worker ratio in a macroeconomic framework, which suggests a negative effect on total factor productivity. Using newly collected longitudinal data on pensioners, we quantify this effect by exploiting variation in the pre-determined component of retirement. We find that a 10-point increase in the pensioner-worker ratio decreases factor productivity by 5-6%. The effect is stronger when production is labor intensive and automation potential is low. Economic aging also impedes the creation of innovation at the technological frontier.
    Keywords: aging, retirement, factor productivity, secular stagnation, demographic transition
    JEL: C23 C26 D24 J11 J14 O40
    Date: 2023
  2. By: Abramov, Alexander (Абрамов, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Radygin, Alexander (Радыгин, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Chernova, Maria (Чернова, Мария) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The purpose of this study is to analyze the experience of creating a system of mandatory pension savings and assess the effectiveness of the activities of non-state pension funds. The research is focused on the management of pension savings portfolios in Russia. As a research method we use portfolio optimization, analysis of long time series on the return of various investment strategies, regression analysis for decomposition of non-state pension fund returns, stochastic modeling of return and risk with given asset allocation and benchmarks, modelling replacement ratio of a pension savings system’s participant. The modern demographic trends, the development of the labour market in the context of the progress of industrial technologies and other processes create the prerequisites for changes in pension systems. At the same time, the increasing volatility of financial markets and the trend of low yields give rise to discussions about the role of the pension savings system, its ability to increase the sustainability of pension system. The ability of existing pension portfolio management strategies to generate the necessary returns for pension savings is challenged. However, the number of studies and reports devoted to the problems of pension fund performance is relatively small. All this predetermines the relevance of studying the aspects of the pension savings system effectiveness, the effectiveness of portfolio management strategies in modern financial markets, and the implementation of regulation practices. The novelty of the study lies in the fact that the authors tried to comprehend the experience of the system of mandatory pension savings, conditions and prerequisites of its implementation, achievements and difficulties, to analyze the effectiveness of the activities of non-state pension funds on pension savings investment. The main result of the study is the development of methodological approaches necessary to assess the success of pension savings reforms in Russia. According to our estimates, the decision to introduce a pension savings pillar had been justified and, under certain circumstances, could have improved the well-being of future pensioners. We conclude that the successful implementation of the mandatory pension savings was violated by the frequent change of the regulation on the long-term horizon, unbalanced development of state and savings pension pillars, and low investment efficiency. In the future, the development of our study should contribute to the development of an institution of long-term and trusted internal savings.
    Keywords: pension funds, non-state pension funds, investments, state pension, pension, mandatory pension savings, management of pension savings
    JEL: G11 G17 G18 H55 J14 J26
    Date: 2022–11
  3. By: Hauer, Mathew
    Abstract: The warnings of potential climate migration first appeared in the scientific literature in the late 1970s when increased recognition that disintegrating ice sheets could drive people to migrate from coastal cities. Since that time, scientists have modelled potential climate migration without integrating other population processes, potentially obscuring the demographic amplification of this migration. Climate migration could amplify demographic change – enhancing migration to destinations and suppressing migration to origins. Additionally, older populations are the least likely to migrate and climate migration could accelerate population aging in origin areas. Here, we investigate climate migration under sea-level rise (SLR), a single climatic hazard, and examine both the potential demographic amplification effect and population aging by combining matrix population models, flood hazard models, and a migration model built on 40 years of environmental migration in the US to project the US population distribution of US counties. We find that the demographic amplification of SLR for all feasible RCP-SSP scenarios in 2100 ranges between 8.6M - 28M [5.7M - 53M] – 5.3 to 18 times the number of migrants (0.4M - 10M). We also project a significant aging of coastal areas as youthful populations migrate but older populations remain, accelerating population aging in origin areas. As the percentage of the population lost due to climate migration increases, the median age also increases – up to 10+ years older in some highly impacted coastal counties. Additionally, our population projection approach can be easily adapted to investigate additional or multiple climate hazards.
    Date: 2023–07–25
  4. By: Bernhard Boockmann; Martin Kroczek; Natalie Laub
    Abstract: We study heterogeneity in the effects of two pension reforms in Germany that closed pathways into early retirement: the abolition of an old-age pension scheme for women and the abolition of a pension after unemployment or part-time work. We focus on heterogeneity with respect to several occupational characteristics. Both reforms had significant effects on individual employment states, and in both cases the effects differ significantly by occupation. The positive effect on employment is smaller in occupations with higher job strain and, in case of the old-age pension for women, the effect on unemployment is larger. The effects also differ by occupational tasks, PC use and the introduction of new technologies.
    Keywords: Pension reforms, effect heterogeneity, occupational demands, occupational tasks
    JEL: J18 J22 J26
    Date: 2023–07
  5. By: Barrie, Helen; Cebulla, Andreas; Lange, Jarrod; Faulkner, Debbie; Sharam, Andrea
    Abstract: This research provides a geographic and demographic picture of low-income renters in Australia aged 50+ (LIRiA50+), as the basis to finding acceptable solutions to the challenges of population ageing and housing needs in the 21st Century. It presents changes in LIRiA50+ populations overtime in a selection of map graphics. Projections indicate increasing numbers of older people needing affordable housing, from approximately 200, 000 households to about 440, 000 households aged 55 years and over by 2031. It is unlikely that public housing will be able to meet this need. The largest projected increases in the LIRiA50+ populations in Australia are likely to be in peri-urban and outer-suburban regions. For example, in New South Wales, the inner-western suburbs are expecting LIRiA50+ population increases of around 40–50 per cent. There are expected to be some significant rises in regional and rural locations, with strong population increases (between 40% and 100%) expected in many regional centres up to 2032. Understanding the current and future distribution and likely growth in low-income, older renter numbers is important for planning and provision of appropriate and affordable housing stock. This data collation will enable aged care service providers and local and state governments, as well as housing providers, developers and policy makers, to better plan solutions to this growing housing issue.
    Date: 2023–08–02
  6. By: International Monetary Fund
    Abstract: Iceland’s mandatory occupational pension fund sector is large, and risks are mostly borne by pension fund members and beneficiaries. The mandatory part of the second pillar is provided by 21 autonomous pension funds, and the large majority of schemes can be categorized as defined ambition, a regime aimed at fully-funded liabilities where risks are borne collectively by the members. Defined-benefit schemes which cover the public sector were closed for new members already in the late 1990s. While defined-ambition schemes do not guarantee any pre-determined pension payment, the system has a targeted minimum replacement rate of 72 percent—the effective replacement rate, however, is determined by the performance of pension funds. Total assets of the pension fund sector1 amount to almost twice the GDP (176 percent at end-2022), making it one of the worldwide largest.
    Date: 2023–07–28
  7. By: Faulkner, Debbie; Sharam, Andrea; James, Amity; Tually, Selina; Barrie, Helen
    Abstract: This final Inquiry brings together the findings of three research projects to address how Australia can deliver the types of housing precariously housed individuals in, or approaching, retirement need to support their life aspirations, wellbeing, participation and inclusion. Over the last 20 years, housing options for older Australians on lower incomes have been getting worse with home ownership rates falling, more people carrying their mortgage debt into retirement and reduced access to social housing. By 2031 an estimated 440, 000 older households will be unable to find or afford suitable housing. Lower income older Australians want housing that is achievable, with some factors gaining greater significance as people get older, such as they want to stay in an affordable home and to live in safe, secure and neighbourhoods. The Inquiry developed and explored alternative housing models through a survey with lower income households. There was a clear preference for a shared equity home ownership model, a cooperative housing model and a transportable housing model, which reflects the expectation that it is ‘normal’ to own one’s home in Australia. In addition, the research highlights that, even though many low income older householders can’t afford any form of mortgage, some people are paying large proportions of their income on rent. If they could get a loan there are two options that have the potential to deliver forms of home ownership, with the security of tenure and well being that provides: shared equity mortgages and land lease mortgages. The research mapped the increases (and decreases) in populations of older low income households across Australia and predicted changes in each area to 2031, measured in suburb-sized geographical areas. The largest projected increases are likely to be in peri-urban and outer-suburban regions, with some significant rises in regional and rural locations.
    Date: 2023–08–02
  8. By: Peltzman, Sam
    Abstract: Since 1972 the General Social Survey (GSS) has asked a representative sample of US adults "[are] you very happy, pretty happy, or not too happy?" Overall, the population is reasonably happy even after a mild recent decline. I focus on differences along standard socio demographic dimensions: age, race, gender, education, marital status income and geography. I also explore political and social differences. Being married is the most important differentiator with a 30-percentage point happy-unhappy gap over the unmarried. Income is also important, but Easterlin's (1974) paradox applies: the rich are much happier than the poor at any moment, but income growth doesn't matter. Education and racial differences are also consequential, though the black-white gap has narrowed substantially. Geographic, gender and age differences have been relatively unimportant, though old-age unhappiness may be emerging. Conservatives are distinctly happier than liberals as are people who trust others or the Federal government. All above differences survive control for other differences.
    Keywords: happiness, demographics, family, Easterlin paradox, education, income, social capital, political ideology
    JEL: D10 D60 E01 I31 J10 J12 J18 Z13
    Date: 2023
  9. By: Zak, Nikolay; Gibbs, Philip
    Abstract: Madame Calment’s extraordinary longevity claim has significantly influenced current estimates of human lifespan. However, recent evidence raises doubts about the authenticity of her record. We compare two competing hypotheses: the base scenario, which assumes that Jeanne’s daughter Yvonne died in 1934, and the switch scenario, which proposes that Yvonne assumed her mother’s identity in 1933. Our analysis suggests that the available evidence supports the switch scenario and contradicts the previously accepted base scenario. This study emphasizes the need to re-evaluate the evidence and highlights the importance of DNA testing (subject to approval by the French authorities). The case of Jeanne Calment was considered the gold standard for age validation. Our research shows that documentation is not always sufficient to verify cases of exceptional longevity. This has important implications for our understanding of the upper limits of human lifespan and demographic patterns in extreme ages.
    Date: 2023–08–08

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