nep-age New Economics Papers
on Economics of Ageing
Issue of 2023‒10‒02
eleven papers chosen by
Claudia Villosio, LABORatorio R. Revelli

  1. The impact of the Covid Pension Fund Withdrawals in Chile on the future retirement income of the Social Security affiliates and their households By Alejandra Inzunza; Carlos Madeira
  2. Graying and staying on the job: The welfare implications of employment protection for older workers By Todd Morris; Benoit Dostie
  3. MANDATORY PENSION SAVINGS IN RUSSIA: EXPERIENCE AND PROSPECTS By Abramov, Alexander (Абрамов, Александр); Radygin, Alexander (Радыгин, Александр); Chernova, Maria (Чернова, Мария)
  4. Population Aging and Income Inequality in a Semi-Endogenous Growth Model By Kazuo Mino; Hiroaki Sasaki
  5. Healthy ageing trends in England between 2002 to 2018: Improving but slowing and unequal By Old, Jonathan; Scott, Andrew
  6. Attitudes to long-term care in India By Alberts, Sweedal; Nadarajah, Abinaya; Cooper, Claudia; Brijnath, Bianca; Loganathan, Santosh; Varghese, Matthew; Antoniades, Josefine; Baruah, Upasana; Dow, Briony; Kent, Mike
  7. Cognitive Aging and Labor Share By Kausik, B.N.
  8. Automatic Enrollment with a 12% Default Contribution Rate By John Beshears; Ruofei Guo; David Laibson; Brigitte C. Madrian; James J. Choi
  9. The Age Gap in Mortgage Access By Natee Amornsiripanitch
  10. Who (Actually) Gets the Farm? Intergenerational Farm Succession in the United States By Adrian Haws; David R. Just; Joseph Price
  11. Las cuentas de la Seguridad Social Ampliada. Series 2005-2023, v1.0 By Ángel de la Fuente

  1. By: Alejandra Inzunza; Carlos Madeira
    Abstract: During the COVID-19 pandemic, Chile enacted three exceptional laws to allow withdrawals from the affiliates’ pension accounts. We analyse the impact of these withdrawals on the pension savings and projected future retirement income of the individual affiliates and their households. We document heterogeneous withdrawal behaviors among income levels, with lower income households using up a higher percentage of their retirement savings. Additionally, we simulate the workers’ contributions to retirement, showing an average reduction of 21% in their contributory pensions. However, due to the increase in non-contributory pension benefits, the average loss in the total pension income is just 8%.
    Date: 2023–08
  2. By: Todd Morris; Benoit Dostie
    Abstract: We study the welfare implications of employment protection for older workers, exploiting recent bans on mandatory retirement across Canadian provinces. Using linked employer-employee tax data, we show that the bans cause large and similar reductions in job separation rates and retirement hazards at age 65, with further reductions at higher ages. The effects vary substantially across industries and firms, and around two-fifths of the adjustments occur between ban announcement and implementation dates. We find no evidence that the demand for older workers falls, but the welfare effects are mediated by spillovers on savings behavior, workplace injuries, and spousal retirement timing.
    Keywords: employment protection; retirement; welfare; active and passive savings responses; health effects; spousal spillovers
    JEL: J26 J78 H55
    Date: 2023
  3. 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: 2022–11–10
  4. By: Kazuo Mino (Institute of Economic Research, Kyoto University); Hiroaki Sasaki (Graduate School of Economics, Kyoto University)
    Abstract: Using a continuous-time overlapping generations model with semi-endogenous growth, this study examines the impact of population aging on inequality. We characterize the stationary distribution of income and wealth among households and investigate how an increase in life expectancy and a decrease in birth rate affect the distributional profile. The numerical experiments revealed that an increase in life expectancy lowers inequality, whereas a decrease in birth rate increases inequality. We also consider extended models with exogenous productivity growth, agents' retirement from labor participation, and endogenous labor supply.
    Keywords: population aging, semi-endogenous growth, overlapping generations model, income and wealth inequality, Pareto distribution
    JEL: E2 O4
    Date: 2023–09
  5. By: Old, Jonathan; Scott, Andrew
    Keywords: Human Society, Demography, Aging, Underpinning research, 1.2 Psychological and socioeconomic processes, Good Health and Well Being, Reduced Inequalities, ADLs, Ageing, Frailty, Healthy ageing, Health inequalities, Applied economics, Economic theory, Policy and administration
    Date: 2023–10–01
  6. By: Alberts, Sweedal; Nadarajah, Abinaya; Cooper, Claudia; Brijnath, Bianca; Loganathan, Santosh; Varghese, Matthew; Antoniades, Josefine; Baruah, Upasana; Dow, Briony; Kent, Mike
    Abstract: Objectives: In India, globalisation is purported to have contributed to shifting family structures and changing attitudes to long-term care (LTC) facility use. We investigated the usage frequency and attitudes to LTC in India. Methods: We conducted secondary analyses of: (a) The LASI (Longitudinal Ageing Study in India) 2017-18 cross-sectional survey of a randomised probability sample of Indian adults aged 45+ living in private households; and (b) Moving Pictures India Project qualitative interviews with 19 carers for people with dementia and 25 professionals, collected in 2022, exploring attitudes to LTC. Results: Of 73, 396 LASI participants, 40 were considering moving to LTC; 18, 281 had a parent alive, of whom 9 reported that their father, and 16 that their mother, was living in LTC. Whilst rare overall, LTC use and consideration of use were more likely to be in urban areas, in middle-richest income quintiles with higher levels of education, and for those who were more likely to rate their health as good or very good. We identified three themes from qualitative data: 1. LTC as a last resort, describes how LTC could be acceptable if care at home was “impossible” due to the person’s medical condition or unavailability of the family carer, for example if they lived abroad. 2. Social expectations of care at home from family members and paid carers and; 3. Limited availability of LTC facilities in India, especially in rural localities, and the financial barriers to their use. Conclusions: Preference for intergenerational community care, limited availability and societal stigma contribute to low rates of LTC use among Indian families. Future social policies should consider how to plan for greater equity in strengthening care at home, supporting care in the community, and bolstering respite and LTC services when other options are not available.
    Date: 2023–08–06
  7. By: Kausik, B.N.
    Abstract: Labor share, the fraction of economic output accrued as wages, is inexplicably declining in industrialized countries. Whilst numerous prior works attempt to explain the decline via economic factors, our novel approach links the decline to biological factors. Specifically, we propose a theoretical macroeconomic model where labor share reflects a dynamic equilibrium between the workforce automating existing outputs, and consumers demanding new output variants that require human labor. Industrialization leads to an aging population, and while cognitive performance is stable in the working years it drops sharply thereafter. Consequently, the declining cognitive performance of aging consumers reduces the demand for new output variants, leading to a decline in labor share. Our model expresses labor share as an algebraic function of median age, and is validated with surprising accuracy on historical data across industrialized economies via non-linear stochastic regression.
    Keywords: Labor share, decline, cognitive aging, biology
    JEL: E22 E23 E24 E25 O3
    Date: 2023–08–24
  8. By: John Beshears; Ruofei Guo; David Laibson; Brigitte C. Madrian; James J. Choi
    Abstract: We study a retirement savings plan with a default contribution rate of 12% of income, which is much higher than previously studied defaults. Twenty-five percent of employees had not opted out of this default 12 months after hire; a literature review finds that the corresponding fraction in plans with lower defaults is approximately one-half. Because only contributions above 12% were matched by the employer, 12% was likely to be a suboptimal contribution rate for employees. Employees who remained at the 12% default contribution rate had average income that was approximately one-third lower than would be predicted from the relationship between salaries and contribution rates among employees who were not at 12%. Defaults may influence low-income employees more strongly in part because these employees face higher psychological barriers to active decision making.
    JEL: D14 D15 G40 G51 J32
    Date: 2023–08
  9. By: Natee Amornsiripanitch
    Abstract: This paper uses data on millions of single-borrower mortgage applications to study the relationship between applicant age and mortgage application outcomes. Conditional on a rich set of applicant, property, and loan characteristics, mortgage refinance applications submitted by older borrowers are associated with higher rejection probabilities. This pattern holds within lender and across loan types. Rejection probability increases smoothly with age and accelerates in old age. The acceleration is slower for female applicants. Inability to maintain properties may contribute as older applicants are more likely to be rejected for insufficient collateral. Lastly, using the loan-level pricing adjustment identification strategy, I find similar empirical relationships between borrower age and coupon rate on home purchase and refinance mortgages that were sold to Fannie Mae and Freddie Mac. Taken at face value, age appears to be an equally important correlate of mortgage application outcomes as race and ethnicity. Overall, the results suggest that older individuals systematically face higher barriers to mortgage access. Potential explanations are discussed.
    Keywords: Aging; Mortgage; Housing; Inequality; Credit Access
    JEL: G21 J1 D63
    Date: 2023–02–28
  10. By: Adrian Haws; David R. Just; Joseph Price
    Abstract: We link census records for millions of farm children to identify owner-operators of the family farm in adulthood, providing the first population-level evidence on intergenerational farm transfers. Using our panel of U.S. census data from 1900 to 1940, our analysis supports the primogeniture hypothesis that oldest sons are more likely to inherit the family farm. Daughters are rarely observed as successors. We find that the birth order relationship among sons is relatively small and is only present for the subset of families with parents who are working age when they first have a successor, indicating that they had a succession plan. In families without an early successor, adult children who are tenant farmers or are not in an urban area are more likely to later inherit their family’s farm. Tenancy and rural residence are much more predictive of succession than is birth order. Thus, unplanned succession may primarily benefit underresourced farmers. With fewer than one-fifth of farm families having a child successor, the slow growth in succession as parents reach retirement age and life expectancy suggests the importance of identifying a successor early.
    JEL: D64 J24 N32 N52 Q12 Q15
    Date: 2023–08
  11. By: Ángel de la Fuente
    Abstract: En esta nota se construyen series de las principales magnitudes económicas de la Seguridad Social Ampliada (SSA), un agregado que combina al Sistema de Seguridad Social con el de Clases Pasivas. Se ofrecen datos sobre los ingresos y gastos del sistema y su composición y sus niveles de déficit y deuda. Entre otras variables de interés, se aproxima el desglose de los ingresos por cotizaciones sociales en dos partes, una de carácter contributivo y otra que constituiría un impuesto puro. También se calculan dos indicadores del déficit de la SSA que miden los recursos adicionales que el Estado ha de inyectar para cubrir la brecha entre el gasto del sistema y sus ingresos propios. El primero, denominado déficit básico, es simplemente el déficit presupuestario total del sistema sin tener en cuenta las transferencias corrientes del Estado. El segundo, el déficit contributivo, es la diferencia entre los gastos y los ingresos contributivos de la SSA y puede interpretarse como el plus de generosidad que el subsistema contributivo de protección social ofrece por encima de lo que sería sostenible con una lógica de puro seguro social de reparto.
    Date: 2023–09

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