nep-age New Economics Papers
on Economics of Ageing
Issue of 2023‒12‒11
eighteen papers chosen by
Claudia Villosio, LABORatorio R. Revelli

  1. Calculating the redistributive impact of pension systems in LAC By Altamirano, Alvaro; Oliveri, María Laura; Bosch, Mariano; Tapia, Waldo
  2. Long-term Care in Denmark By Mette Gørtz; Bent Jesper Christensen; Nabanita Datta Gupta
  3. Long-term Care in the United States By Jonathan Gruber; Kathleen M. McGarry
  4. Retirement Age Trap: RDD Approach to Terminated Retirement Spells By Linden, Mikael
  5. Retirements Surge for Older Workers during COVID-19 By Maximiliano Dvorkin; Maggie Isaacson
  6. How changes in housing prices affect family relationships and life satisfaction among Older Household Heads in Korea By CheolHoon Park; Jun Hyung Kim
  7. Long-term Care Around the World By Jonathan Gruber; Kathleen M. McGarry; Charles Hanzel
  8. PAY-AS-THEY-GET-IN: ATTITUDES TOWARDS MIGRANTS AND PENSION SYSTEMS By Massimo Morelli; Tito Boeri; Matteo Gamalerio; Margherita Negri
  9. The Economics of Long-Term Care in Canada By Kevin S. Milligan; Tammy Schirle
  10. Essays on work and retirement By Rutten, Albert
  11. Impact of Demographic Trends on Antimicrobial Resistance By Roshen Fernando
  12. The Great Retirement: Who Are the Retirees? By Lowell R. Ricketts; William M. Rodgers
  13. Optimal Retirement Choice under Age-dependent Force of Mortality By Ferrari, Giorgio; Zhu, Shihao
  14. Arbeits- und Personalsituation in der Alten- und Krankenpflege. Wie beurteilen Beschäftigte und Führungskräfte Belastungsfaktoren, Ressourcen und Handlungsmöglichkeiten? By Senghaas, Monika; Struck, Olaf
  15. Bridging the gap between science and care: a qualitative exploration of the role of the Scientific Linking Pin researcher working in research and practice partnerships By Everink, Irma; Urlings, Judith; Griffiths, Alys; Verbeek, Hilde; Haunch, Kirsty; Spilsbury, Karen; Hamers, Jan; Devi, Reena
  16. Spurring Americans to Build Their Nest Egg By Brigitte C. Madrian
  17. A behavioral study of Roth versus traditional retirement savings accounts By Clement E. Bohr; Charles A. Holt; Alexandra V. Schubert
  18. The Evolution of the Racial Gap in U.S. Life Expectancy By Siddhartha Sanghi; Amy Smaldone

  1. By: Altamirano, Alvaro; Oliveri, María Laura; Bosch, Mariano; Tapia, Waldo
    Abstract: This paper examines the implicit subsidies within pension systems across Latin America and the Caribbean (LAC) region. We first calculate the theoretical benefits of pension for hypothetical workers in 25 countries in LAC. We show that, on average, LAC's pension systems are subsidized, as they provide pensions above what workers would have obtained by investing pension contributions in a safe asset. Similarly, pension systems are designed to be progressive by offering higher replacement rates (pensions relative to earnings) for low-income workers. Despite this progressivity, in some countries, absolute subsidies could be higher for high-income workers. This occurs because the cost of one percentage point of the replacement increases with the average pension. Second, using data from social protection surveys, we estimate the incidence of pension systems in five LAC countries. We show that, on average, all five systems provide important subsidies to those workers who obtain a pension. However, given the high levels of informal work, in some countries, those subsidies are highly concentrated among high-income workers. Variation is large across countries. The three highest labor income deciles concentrate 70-95% of all subsidies in defined benefit systems such as Paraguay and Colombia. In defined contribution systems, subsidies are much more progressive, but still, because low-income workers do not qualify for minimum pensions, between 50-60% of subsidies concentrate in the high-income deciles. Countries like Chile, with explicit subsidies targeted at the bottom of the income distribution, obtain a more progressive distribution of subsidies. Because of relatively low participation rates, women have a weaker link with the pension system. They are also less likely to benefit from implicit subsidies. Finally, we show that non-contributory pensions, if well-targeted, largely improve the redistributive properties of pension systems in LAC.
    Keywords: pensions; subsidies; taxes; Latin America
    JEL: H55 J11 J14 J18 J26 J32
    Date: 2023–11–01
  2. By: Mette Gørtz; Bent Jesper Christensen; Nabanita Datta Gupta
    Abstract: The population is aging in Denmark, as in many other countries, due to increasing life expectancy and a low total fertility rate. This potentially puts the Danish welfare state under pressure. This paper discusses the demographic and socioeconomic situation of the elderly in Denmark, focusing on the health status and financial situation of the elderly, and the provision of long-term care (LTC). We rely on a combination of survey data, mainly from the Survey of Health and Retirement in Europe (SHARE), and high-quality register data covering the entire Danish population. We find that a large fraction of the elderly is in good health, but that those in the older age group, 85+, face considerably more functional limitations in daily living. One in three of the elderly receives some form of long-term care, and more than half the 85+ group. The paper further identifies a number of current challenges regarding organization of the long-term care sector, including recruitment of personnel for health care and LTC. Finally, the paper sheds light on the extent of informal care provided by family and friends. While informal care is offered voluntarily and is generally unpaid, it represents a substantial opportunity cost to society.
    JEL: H51 I1
    Date: 2023–11
  3. By: Jonathan Gruber; Kathleen M. McGarry
    Abstract: The population of the United States, as with the rest of the world, is aging rapidly, with the most rapid growth occurring among the age 85 and older population, those who rely most on long-term care. In this chapter, we review the delivery and financing of long-term care in the U.S. We show that the resources of most elderly in the U.S. are insufficient to finance these ongoing long-term care needs and the public sector finances the majority of long-term care spending. At the same time, informal care plays a critical role, with the elderly at every age and every disability level receiving informal care more frequently than formal care. Indeed, when properly valued, informal care accounts for more than one-third of the nearly 2 percent of U.S. GDP devoted to long-term care.
    JEL: H4 H50 I13 I18
    Date: 2023–11
  4. By: Linden, Mikael
    Abstract: Regression discontinuity (RD) analysis of retirement durations and retiree death ages is conducted with the Finnish year 1947 birth cohort. Data consist of observations from the sample follow-up period in 1.1.2007 – 31.12.2019. For the year 1947 cohort the eligible retirement age with old-age pension is between the ages of 63 and 68 years. However, the observed pension ages are quite often less than 63 years although the statutory minimum retirement age regulates persons’ retirement times. This means that for some retirees age of 63 years constitutes a queuing age that is against their retirement intentions, and this affects their retirement spells. We find with RD methods that close after death age of 63 years, the retirement spells discontinuously shortens although the higher death age should give room for the longer retirement spells. The point estimates for regression discontinuity effects on terminated retirement spells are in the range of from –1.09 to –0.56 in loss of year depending on the used sub-samples, covariates, and estimation methods. These findings are interpreted to conflict retirement intentions of retirees retiring at age of 63 years.
    Keywords: Regression discontinuity, retirement duration, age of death, statutory minimum retirement
    JEL: C21 J10 J26
    Date: 2023–11
  5. By: Maximiliano Dvorkin; Maggie Isaacson
    Abstract: Though retirement decisions vary by different age groups, the COVID-19 pandemic increased retirement rates for those age 66 and older.
    Keywords: COVID-19; retirement; older workers
    Date: 2021–12–20
  6. By: CheolHoon Park; Jun Hyung Kim
    Abstract: This study analyzes whether changes in residential housing prices affect family relationships and life satisfaction among the older household heads based on life satisfaction theory and wealth theory. To do so, we analyzed the residential housing prices of 596 respondents at two points in time between 7th and 8th wave of the Aging Research Panel Survey in Korea. We summarize our findings as follows First, we found that changes in housing prices have different effects on life satisfaction for different age groups. Second, we found that women are more sensitive to housing prices than men. Third, we found that family relationships are more sensitive to wealth at older ages. These results indicate that the impact of residential housing prices on life satisfaction differs among different age groups of the elderly and suggest the need for a Korean life-cycle hypothesis design to guide successful aging of the elderly.
    Keywords: family relationship; Housing Price; Life Satisfaction; preparation for retirement
    JEL: R3
    Date: 2023–01–01
  7. By: Jonathan Gruber; Kathleen M. McGarry; Charles Hanzel
    Abstract: The developed world is in the midst of an enormous demographic transition, with life expectancy increasing and fertility falling, leading to a rapid aging of the population. This trend has critical implications for long-term care around the world. This paper serves as the introduction to a volume that brings together experts from ten countries to compare long term care systems. We find a number of important similarities: only a minority of those elderly receiving assistance rely solely on formal care (i.e. care in an institution or through paid home care) while the majority of care is provided informally by family or other unpaid caregivers; without public support, the cost of long-term care would be beyond the financial means of a large fraction of the elderly in each country, particularly for the oldest and most disabled; and the public sector bears the majority of the costs of formal long-term care in every country. There are, however, important differences across countries, particularly in the extent to which formal care is delivered in institutions or at home, and in the division between the use of formal and informal care. Given the importance of informal care across all countries studied, we conclude that any estimate of the social costs of long-term care must account for the implicit costs of informal care. In undertaking such an evaluation of informal care, we find that it comprises at least one-third of all long-term care spending for all countries studied, with an average portion of nearly fifty percent.
    JEL: H4 I10 I13 I18
    Date: 2023–11
  8. By: Massimo Morelli; Tito Boeri; Matteo Gamalerio; Margherita Negri
    Abstract: We study whether a better knowledge of the functioning of pay-as-you-go pension systems and recent demographic trends affects natives’ attitudes towards immigration. In two online experiments conducted in Italy and Spain, we randomly treated participants with a video explaining how, in pay-as-you-go systems, the payment of current pensions depends on the contributions paid by current workers. The video also informs participants about population aging trends in their countries. The treatment increases knowledge of pay-as-you-go systems and future demographic trends for all participants. However, it improves attitudes towards migrants only for treated participants who do not support populist and anti-immigrant parties. Keywords: Information provision, experiment, immigration, pay-as-you-go pension systems, population aging, populism JEL:C90, D83, H55, J15, F22.
    Date: 2023
  9. By: Kevin S. Milligan; Tammy Schirle
    Abstract: This paper contributes a broad overview of the Canadian long-term care system. Taking an economist’s viewpoint, we bring together supply and demand factors to provide an economic analysis of the current and future path for long-term care. Like other OECD countries, the coming demographic wave of older baby boomers will put tremendous stress on the existing financial, organizational, and physical structures of the long-term care system. Unlike other OECD countries, Canada’s system is organized almost entirely at the subnational level, with provinces and territories having by far the largest role in financing and regulating long-term care. We provide institutional and empirical details on the evolution and future of Canada's long-term care system.
    JEL: H51 I13 I18 J18
    Date: 2023–11
  10. By: Rutten, Albert (Tilburg University, School of Economics and Management)
    Date: 2023
  11. By: Roshen Fernando
    Abstract: Medical advancements in the twenty-first century significantly contribute to increased longevity and the current global demographic trends, including population aging. While rising antimicrobial resistance (AMR) threatens the sustainability of longevity prospects, the current demographic trends also contribute to worsening AMR. We investigate the role of four demographic indicators (population growth, population aging, population density, and urbanization) in the resistance growth of seven pathogens against twelve antimicrobials in 30 countries from 2000 to 2020. We observe heterogeneous responses of different antimicrobial drug-pathogen combinations to demographic trends. We observe that the demographic trends could affect resistance growth more than antimicrobial consumption growth in some antimicrobial-drug pathogen combinations. We emphasize the importance of a broader exploration of factors affecting AMR evolution from a one-health approach and enhanced AMR surveillance, among others, to produce effective policy responses to tame AMR.
    Keywords: Antimicrobial resistance, Infectious diseases, Demographic Trends, Population Growth, Population Aging, Urbanization, Econometrics, Machine Learning
    JEL: C51 C53 C54 C55 C68 F41 Q51 Q54
    Date: 2023–11
  12. By: Lowell R. Ricketts; William M. Rodgers
    Abstract: Millions of U.S. workers age 65 and older have exited the labor market during the pandemic. Who is more likely to retire?
    Keywords: older workers; labor markets; COVID-19
    Date: 2022–01–04
  13. By: Ferrari, Giorgio (Center for Mathematical Economics, Bielefeld University); Zhu, Shihao (Center for Mathematical Economics, Bielefeld University)
    Abstract: This paper examines the retirement decision, optimal investment, and consumption strategies under an age-dependent force of mortality. We formulate the optimization problem as a combined stochastic control and optimal stopping problem with a random time horizon, featuring three state variables: wealth, labor income, and force of mortality. To address this problem, we transform it into its dual form, which is a finite time horizon, three-dimensional degenerate optimal stopping problem with interconnected dynamics. We establish the existence of an optimal retirement boundary that splits the state space into continuation and stopping regions. Regularity of the optimal stopping value function is derived and the boundary is proved to be Lipschitz continuous, and it is characterized as the unique solution to a nonlinear integral equation, which we compute numerically. In the original coordinates, the agent thus re- tires whenever her wealth exceeds an age-, labor income- and mortality-dependent transformed version of the optimal stopping boundary. We also provide numerical illustrations of the optimal strategies, including the sensitivities of the optimal retirement boundary concerning the relevant model’s parameters.
    Keywords: Optimal retirement time, Optimal consumption, Optimal portfolio choice, Duality, Optimal stopping, Free boundary, Stochastic control
    Date: 2023–11–21
  14. By: Senghaas, Monika (Institute for Employment Research (IAB), Nuremberg, Germany); Struck, Olaf (Universität Bamberg)
    Abstract: "The demand for personnel in inpatient and outpatient care is rising much faster than the growth in the number of people employed in care professions. At the same time, the working conditions are considered unattractive both by the public and within the care sector. Against this background, the IAB and the University of Bamberg are investigating approaches to cope with the challenging for employees, employers, those in need of care and the state in the research project “Employment and Working Conditions in the Health Sector. A multi-method study”. This report presents results based on qualitative interviews with employees and managers in hospitals and long-term care. The focus of the interviews was on institutional and organisational conditions of professional care giving. In addition, interviewees were asked which instruments and approaches they consider effective in terms of maintaining the current workforce as employees and attracting new employees. Furthermore, caseworkers at employment agencies were asked about their experience in providing employment services in the area of health and care professions. The fact that employees in hospitals and long-term care report high workloads has been intensively documented in the literature. Our results show that stress perceptions of care staff are closely related to their professional understanding of their role. Professional needs orientation, i.e. care oriented to the health and individual needs of the person being cared for, is at the core of their professional identity. In their day-to-day work, care staff can hardly fulfil their own quality standard due to the high workload. This is associated with psychological strain and stress. The desire to exercise a meaningful activity is a common motive for choosing a care profession. Under the current conditions, however, care staff often do not experience their work as meaningful. All respondents believe that labour shortages play an important role for care work perceived to be stressful. Increased stress due to more frequent night and shift work and more frequent short-term stand-ins in the event of work absences are also attributed to the labour shortage. The interviews suggest that care professionals reduce their working hours in order to reduce individual stress and to create space for necessary regeneration phases. Caregivers attach great importance to the recognition they receive for their work. This involves recognition by the people they care for and, where appropriate, their relatives, as well as the recognition they receive in and from the care institution in which they work. Recognition is also reflected in salary, which is also perceived as significant. The respondents see pay primarily as a starting point for attracting new workers to the care sector. In order to retain people in the care sector, they also consider the working atmosphere and the esteem in which they are held by the organization to be important. If the staff situation is to be adapted to the needs in the care sector, significantly more people will have to be successively integrated into specialist care. Some employers refer to the increased number of people working in hospitals and long-term care as a counterargument to a generally poor image of these professions. But all respondents agree that there is no way around increasing the training more future care staff. According to managers, recruitment problems currently affect skilled workers in particular, whereas it is easier to recruit less qualified staff. It is therefore also important to train more the less qualified staff in hospitals and elderly care facilities to a greater extent than has been the case to date. This applies in particular to inpatient and outpatient care for the elderly, where the proportion of employees at helper level, at 47 percent and 40 percent respectively, is significantly higher than in hospitals, where it is 12 percent (Statistik der Bundesagentur für Arbeit 2023b, Abb. 3). In order to compensate for any migration to hospitals by elderly care, which is more heavily staffed with helpers, incentives would have to be created to fill the positions needed in elderly care, for example by adjusting salaries and nursing rates. Secondly, in order to encourage further training, incomes must be provided at a substantial level during the qualification phase. Employers should be informed about existing opportunities for subsidized training of their employees (e.g., via § 82 SGB III). Existing subsidies from the Federal Employment Agency for specialized training should also be expanded where appropriate." (Author's abstract, IAB-Doku) ((en))
    Keywords: Bundesrepublik Deutschland ; IAB-Open-Access-Publikation ; Fachkräfte ; Krankenhaus ; Krankenpflege ; Krankenschwester ; Altenheim ; Altenpflege ; Altenpfleger ; Personalbedarf ; Personalbeschaffung ; Pflegeberufe ; Pflegefachkraft ; physische Belastung ; psychische Faktoren ; Arbeitsbedingungen ; Arbeitsbelastung ; Mitarbeiterbindung ; Arbeitsintensität ; Arbeitskräftemangel ; Arbeitssituation ; 2022-2022
    Date: 2023–08–21
  15. By: Everink, Irma; Urlings, Judith; Griffiths, Alys; Verbeek, Hilde; Haunch, Kirsty; Spilsbury, Karen; Hamers, Jan; Devi, Reena
    Abstract: Context: The Living Lab in Ageing and Long-Term Care (Netherlands) and Nurturing Innovation in Care Homes Excellence in Leeds (NICHE-Leeds; UK) are partnerships between science and care. The Scientific Linking Pin (SLP), a senior researcher employed by a university, works one day per week in a LTC organization, and has a pivotal role in the partnership. Objective: To explore the nature of the SLP role Methods: A qualitative approach was used. Fifteen individuals with at least one year’s experience as a SLP in the Living Lab or NICHE-Leeds participated in a semi-structured interview. Data were thematically analyzed. Findings: Participants described how the SLP role gave them insight into what matters to care organizations, and how it enabled them to impact LTC practice. Participants experienced the role to be multifaceted. Goals and activities performed by SLPs included developing relationships, raising awareness of the practice-science partnership, identifying (research) priorities and generating research questions, building committees, brokering knowledge, developing research studies, generating academic output, building links and connections, and assisting with internal projects. Challenges faced were mistrust by care staff and poor engagement, working with staff from different professional backgrounds, research not being a priority, multiple and rapidly changing priorities, and differences in expectations. SLPs addressed these challenges through relationship building, creating a ‘safe’ space for care staff, building engagement, and expectation management. Implications: Partnership working in the care sector is gaining international recognition and adoption, and therefore it is useful to capture and share learning about successful implementation of our approach.
    Keywords: long term care; care homes; citizen science; partnership working; co-production; quality improvement
    JEL: J50
    Date: 2023–10–26
  16. By: Brigitte C. Madrian
    Abstract: Research by Brigitte Madrian, dean at the Brigham Young University Marriott School of Business, helped expand enrollment in 401(k) programs.
    Keywords: retirement savings; 401(k) programs; behavioral economics; women in economics
    Date: 2021–12–21
  17. By: Clement E. Bohr; Charles A. Holt; Alexandra V. Schubert
    Abstract: Motivated by a popular perception that Roth accounts are welfare-improving for most people, this paper compares the effects of mandated Traditional (tax-deferred) or Roth (taxprepaid) retirement policies in a controlled laboratory setting. Selection effects, which complicate analyses of observational data, are avoided by random assignment to policies. Subjects receive exogenous incomes during “working” periods, followed by no-income “retirement” periods. In each period, subjects decide how many lab dollars to convert into “takehome pay, ” akin to consumption with diminishing returns. Subjects’ decisions determine retirement savings and tax payments. Flat income and tax-rate profiles facilitate the analysis of behavioral factors like present-period tax avoidance, while optimal consumption and after-tax savings are identical for both treatments. Our results show that observed savings are suboptimal in both treatments and are influenced by gender, patience, and risk aversion measures. In contrast to conventional wisdom, there are no significant differences between policies; if anything, the Traditional treatment leads to marginally higher post-retirement consumption.
    Keywords: Retirement, tax-deferred savings, Roth, IRA, compound interest bias, laboratory experiments
    JEL: C91 D84 D91 E21 H24 J32
    Date: 2023–11
  18. By: Siddhartha Sanghi; Amy Smaldone
    Abstract: White Americans live longer than Black Americans, but the gap has been narrowing. What has been driving that in recent decades?
    Keywords: life expectancy; racial gap
    Date: 2022–01–27

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