nep-age New Economics Papers
on Economics of Ageing
Issue of 2023‒12‒18
nine papers chosen by
Claudia Villosio, LABORatorio R. Revelli

  1. Long-term Care in Germany By Johannes Geyer; Axel H. Börsch-Supan; Peter Haan; Elsa Perdrix
  2. The Wellbeing Effects of an Old Age Pension: Experimental Evidence for Ekiti State in Nigeria By María Laura Alzua; Natalia Cantet; Ana C. Dammert; Damilola Olajide
  3. Projections of socioeconomic costs of dementia in China 2020-2050: modelling study By Wu, Y.; Liu, Y.; Chen, Y.; Liu, Y.; Lobanov-Rostovsky, S.; Zhang, Y.; Liu, Y.; Brunner, E.; Liu, Y.; Liu, Y.
  4. A reform option for pension fund contribution as tax expenditure in South Africa: A microsimulation model approach using tax administrative data By Ada Jansen; Winile Ngobeni; Wynnona Steyn
  5. Optimal Retirement Choice under Age-dependent Force of Mortality By Giorgio Ferrari; Shihao Zhu
  6. Demography, Growth, and Robots in Advanced and Emerging Economies By Gravina, Antonio Francesco; Lanzafame, Matteo
  7. Why Do Couples and Singles Save during Retirement? Household Heterogeneity and its Aggregate Implications By De Nardi, M.; French, E.; Bailey Jones, J.; McGee, R.
  8. Life and Death at the Margins of Society: The Mortality of the U.S. Homeless Population By Bruce D. Meyer; Angela Wyse; Ilina Logani
  9. Progressive Pensions as an Incentive for Labor Force Participation By Püschel, Veronika; Kindermann, Fabian

  1. By: Johannes Geyer; Axel H. Börsch-Supan; Peter Haan; Elsa Perdrix
    Abstract: This chapter provides an overview of the German long-term care insurance. We document care needs and wellbeing of the elderly population. Moreover, we provide a detailed description of the German long-term care institutions (sources of finance and types of benefits), the professional care work force, and informal caregivers. Finally, we document expenditures on long-term care and estimate the value of informal care. The cost of long-term care for the elderly (65+), including both cost of nursing home and home health agency, reached 61 billion euro in 2019. Half of these spending are for nursing homes while only about 22.5% of beneficiaries use these institutions. Out-of-pocket spending differs greatly between modes of care. Out-of-pocket expenditures make up only about 7% of total expenditures for home care. In nursing homes, 41% of expenditures are out-of-pocket payment. Most of the expenditures are covered by the long-term care insurance. The share of other governmental schemes in expenditures for inpatient care is relatively high. This is explained by a high rate of benefit recipients who cannot afford co-payments for nursing homes: about one-third of all nursing home residents receive means- and wealth-tested social assistance. If we add the costs of informal care the share of privately financed care amounts to nearly 60% of total expenditures.
    JEL: H51 I13 I18
    Date: 2023–11
  2. By: María Laura Alzua (CEDLAS-IIE-FCE-UNLP, CONICET & Partnership for Economic Policy); Natalia Cantet (Department of Economics and Finance, Universidad EAFIT); Ana C. Dammert (Economics and International Affairs, Carleton University); Damilola Olajide (Initiative for Evidence-Based Development and Empowerment)
    Abstract: Many countries in the developing world have implemented old-age pensions. Evidence of the impact of such policies on the elderly in sub-Saharan Africa, however, is scarce. We provide evidence from a randomized evaluation of an unconditional old-age pension targeted at the elderly in Ekiti State, Nigeria. Our findings show that treated beneficiaries self-report better quality of life and a more stable mental health. We also provide evidence of spillover effects on the labor outcomes of other household members and of household savings patterns as well as support for interventions aimed at improving the welfare of elderly poor citizens and other household members.
    JEL: C21 C93 H31 H55 H75 I38
    Date: 2023–12
  3. By: Wu, Y.; Liu, Y.; Chen, Y.; Liu, Y.; Lobanov-Rostovsky, S.; Zhang, Y.; Liu, Y.; Brunner, E.; Liu, Y.; Liu, Y.
    Abstract: This study measured current and projected future socioeconomic costs (healthcare, formal care, and informal care costs) and quality adjusted life years (QALYs) lost to dementia in China, and assesses drivers of these costs. We synthesized health and demographic trends by a Markov model, using data from China Health and Retirement Longitudinal Study and Chinese Longitudinal Healthy Longevity Survey. We decomposed socioeconomic costs changes (2018 US$) into population growth, population ageing, dementia prevalence and average socioeconomic costs per case. Socioeconomic costs and the value of QALYs lost to dementia will reach $1, 233 and $702 billion by 2050, rising by 563% and 457% over 2020-2050. Informal care is currently, and projected to remain, the largest share of socioeconomic costs. Population ageing (43%) and rising dementia prevalence (54%) drive this growth through 2050. Dementia will become an increasingly large economic burden on Chinese society.
    Keywords: Dementia, Socioeconomic Costs, Costs of Quality of Life Lost, Modelling Studies, China
    Date: 2023–12–04
  4. By: Ada Jansen; Winile Ngobeni; Wynnona Steyn
    Abstract: South Africa has a progressive broad-based personal income tax system with relatively few tax expenditures. The two most important are the medical contribution plus additional tax credits for medical expenses, and the deductions allowed for retirement contributions. A pertinent question for tax reform in South Africa is whether redistributive gains can be achieved by restructuring expenditures in the personal income tax system. This paper considers the redistributive implications of converting the tax deduction for retirement contributions to a tax credit.
    Keywords: Pensions, Tax expenditures, Microsimulation, Tax credit
    Date: 2023
  5. By: Giorgio Ferrari; Shihao Zhu
    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 retires 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.
    Date: 2023–11
  6. By: Gravina, Antonio Francesco (University of Palermo); Lanzafame, Matteo (Asian Development Bank)
    Abstract: This paper provides estimates of the impact of demographic change on labor productivity growth, relying on annual data over 1961-2018 for a panel of 90 advanced and emerging economies. We find that increases in both the young and old population shares have significant negative effects on labor productivity growth, working via various channels—including physical and human capital accumulation. Splitting the analysis for advanced and emerging economies shows that population aging has a greater effect on emerging economies than on advanced economies. Extending the benchmark model to include a proxy for the robotization of production, we find evidence indicating that automation reduces the negative effects of unfavorable demographic change—in particular, population aging—on labor productivity growth.
    Keywords: demographic change; labor productivity; robots
    JEL: C33 J11 O40
    Date: 2023–11–09
  7. By: De Nardi, M.; French, E.; Bailey Jones, J.; McGee, R.
    Abstract: We estimate a model of savings for retired couples and singles who face longevity and medical expense risks, and in which couples can leave bequests both when the first and last spouse dies. We show that saving motives vary by marital status, permanent income, and age. We find that most households save more for medical expenses than for bequests, but that richer households and couples, who hold most of the wealth, save more for bequests. As a result, bequest motives are a key determinant of aggregate retirement wealth.
    Date: 2023–11–28
  8. By: Bruce D. Meyer; Angela Wyse; Ilina Logani
    Abstract: This paper examines the relationship between extreme socioeconomic disadvantage and poor health by providing the first detailed and accurate picture of mortality patterns among people experiencing homelessness in the U.S. Our analyses center on 140, 000 people who were sheltered or unsheltered homeless during the 2010 Census, by far the largest sample ever used to study this population and the only sample designed to be nationally representative. These individuals, along with housed comparison groups, are linked to Social Security Administration data on all-cause mortality from 2010-2022 to estimate the magnitude of health disparities associated with homelessness. We find that non-elderly people experiencing homelessness have 3.5 times the mortality risk of those who are housed, accounting for differences in demographic characteristics and geography, and that a 40-year-old homeless person faces a similar mortality risk to a housed person nearly twenty years older. Our results reveal notable patterns in relative mortality risk by age, race, gender, and Hispanic ethnicity and suggest that within the homeless population, employment, higher incomes, and more extensive observed family connections are associated with lower mortality. The mortality hazard of homeless individuals rose by 33 percent during the COVID-19 pandemic, an increase that, while similar in proportional terms to the increase for the housed population, affected a much larger share of the homeless population due to their substantially elevated baseline mortality rate. These findings elucidate the persistent hardships associated with homelessness and show that the well-documented gradient between health and poverty persists into the extreme lower tail of socioeconomic disadvantage.
    JEL: I0 J0 R0
    Date: 2023–11
  9. By: Püschel, Veronika; Kindermann, Fabian
    JEL: D15 H31 H55 J21 J22
    Date: 2023

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