nep-age New Economics Papers
on Economics of Ageing
Issue of 2024‒06‒10
seven papers chosen by
Claudia Villosio, LABORatorio R. Revelli

  1. Optimal Retirement Age: Death Hazard Rate Approach By Linden, Mikael
  2. Labor Market Externalities of Pre-retirement Employment Protection By Chrostek, Paweł; Karbownik, Krzysztof; Myck, Michal
  3. Children's Residential Proximity, Spousal Presence and Dementia Risk By Lin, Zhuoer; Yin, Xuecheng; Levy, Becca R.; Yuan, Yue; Chen, Xi
  4. Updating the retirement-consumption puzzle in Italy: who are the most affected? By Marini, Andrea
  5. Demographic Dynamics and Immigration Policies in High-Income Countries By Eduardo Andrade; Otaviano Canuto
  6. Heat, Health, and Habitats: Analyzing the Intersecting Risks of Climate and Demographic Shifts in Austrian Districts By Hannah Schuster; Axel Polleres; Amin Anjomshoaa; Johannes Wachs
  7. A Theory of Lifetime Welfare: Cycles, Trend, Span, and Policies By Vallejo, Hernán

  1. By: Linden, Mikael
    Abstract: A model with special attention on the (subjective) survival probability is proposed to understand salient aspects of retirement age decision. Optimal retirement age results are derived with a death hazard rate function having non-negative duration dependence. At the optimum age, the retiree wants to have a compensation in the form of early retirement for his/her evident non-zero death risk. A retiree with large welfare inputs supporting mortality risk decreasing effects delays his/her retirement time. From policy perspective we need to lower the elderly health costs to reduce the death hazard rates leading to higher optimal retirement ages. Some empirical findings with the birth year 1947 cohort in Finland do not conflict the model results. Death hazard rate function estimates show that gender, health, civil status, incomes, and pension affect the death hazard rates. The retirement age has a longevity increasing effect across the different model specification.
    Keywords: Optimal retirement age, survival probabilities, death hazard rate function, survival model estimation, frailty.
    JEL: C41 I12 J14
    Date: 2024–04
  2. By: Chrostek, Paweł (Institute of Economics, Polish Academy of Sciences); Karbownik, Krzysztof (Emory University); Myck, Michal (Centre for Economic Analysis, CenEA)
    Abstract: Using population-level administrative data, we study labor market externalities stemming from age-specific employment protection legislation (EPL) targeted towards older workers. Our results show no economically meaningful overall effects of the EPL on employment or earnings of either men or women approaching eligibility. Considering separately incumbent workers and non-employees we find small positive and small negative employment effects for the former and the latter groups, respectively.
    Keywords: employment protection, older workers, labour market policy, externalities
    JEL: J63 J21 J23
    Date: 2024–04
  3. By: Lin, Zhuoer; Yin, Xuecheng; Levy, Becca R.; Yuan, Yue; Chen, Xi
    Abstract: Cognitive impairment poses considerable challenges among older adults, with the protective role of family support becoming increasingly crucial. This study examines the role of children's residential proximity and spousal presence with dementia risk in cognitively impaired older adults. We analyzed 14, 600 individuals aged 50 and older with cognitive impairment from the Health and Retirement Study (1995-2018). Family support was categorized by spousal presence and children's residential proximity. Modifiable risk factors, including smoking, depressive symptoms, and social isolation, were assessed. Mixed-effects models were estimated. A significant proportion of older adults with cognitive impairment lacked access to family support, with either no spouse (46.9%) or all children living over 10 miles away (25.3%). Those with less available family support, characterized by distant-residing children and the absence of a spouse, had a significantly higher percentage of smoking, depressive symptoms, and social isolation. Moreover, we revealed a consistent gradient in the percentage of the risk factors by the degree of family support. Relative to older adults with a spouse and co-resident children, those without a spouse and with all children residing further than 10 miles displayed the highest percentage of the risk factors. These findings were robust to various sensitivity analyses.
    Keywords: dementia, depression, social isolation, smoking, long-term care, family support, residential proximity
    JEL: I12 J14 I18 I11
    Date: 2024
  4. By: Marini, Andrea
    Abstract: In this paper I investigate the retirement-consumption puzzle in Italy for the period 2010-2016, using SHIW data. In order to address the endogeneity of the retirement decision, I estimate the effect of retirement by exploiting the exogeneity of pension eligibility in an instrumental variable approach; the IV regression is then applied in a regression discontinuity design where only households close to the eligibility point are considered. The eligibility-instrument is found to be a strong predictor of the retirement decision, and the estimated non-durable consumption drop is equal to 12.3%. When households are distinguished according to the gender of the household head, female-led households are found to undergo a consumption decline that is more than double that estimated for households with male heads. The data and the literature on the subject indicate that this large difference is likely related to the gender pay-gap that translates into a gender pension-gap. Moreover, the consumption decline appears to be concentrated in households in the lower part of the wealth distribution. Nonetheless, households in the lowest wealth quintile, do not show a significant consumption decline. The data suggests that this might be due to the impossibility for these households to further reduce their consumption at retirement, as they are mostly composed of essential expenditures. JEL Classification: E2, E21, E24, J26, C01
    Keywords: expenditures, household economics, inequality, instrumental variable regression, regression discontinuity design
    Date: 2024–05
  5. By: Eduardo Andrade; Otaviano Canuto
    Abstract: Most high-income countries will experience declines in their populations over the next few decades. Some negative consequences of aging are on the horizon: greater fiscal imbalances and risks of economic stagnation. Immigration may by a way for those countries to mitigate the tendency. On the source side of immigration flows, brain drain is a risk. The policy paper presents the case of Japan, a nation that has grappled with the consequences of a declining and aging population for several years, as an example for other countries destined to confront similar circumstances in the forthcoming decades. Population aging is a strong trend in place. Some negative consequences of aging are on the horizon: greater fiscal imbalances and the risk of economic stagnation. Most high-income countries will experience a decline in their populations over the next few decades, and immigration is a way to offset this tendency. On the source side of immigration flows, ‘brain drain’ is a risk.
    Date: 2024–04
  6. By: Hannah Schuster; Axel Polleres; Amin Anjomshoaa; Johannes Wachs
    Abstract: The impact of hot weather on health outcomes of a population is mediated by a variety of factors, including its age profile and local green infrastructure. The combination of warming due to climate change and demographic aging suggests that heat-related health outcomes will deteriorate in the coming decades. Here, we measure the relationship between weekly all-cause mortality and heat days in Austrian districts using a panel dataset covering $2015-2022$. An additional day reaching $30$ degrees is associated with a $2.4\%$ increase in mortality per $1000$ inhabitants during summer. This association is roughly doubled in districts with a two standard deviation above average share of the population over $65$. Using forecasts of hot days (RCP) and demographics in $2050$, we observe that districts will have elderly populations and hot days $2-5$ standard deviations above the current mean in just $25$ years. This predicts a drastic increase in heat-related mortality. At the same time, district green scores, measured using $10\times 10$ meter resolution satellite images of residential areas, significantly moderate the relationship between heat and mortality. Thus, although local policies likely cannot reverse warming or demographic trends, they can take measures to mediate the health consequences of these growing risks, which are highly heterogeneous across regions, even in Austria.
    Date: 2024–05
  7. By: Vallejo, Hernán (Universidad de los Andes)
    Abstract: This article presents a theory of lifetime welfare, considering the corresponding cycles, trend, and span. The model suggests that economic agents should focus more on improving, smoothing, and stabilizing the welfare trend of individuals, than on improving, smoothing, and stabilizing their consumption and income, since they are not the same. Given that private and public decisions can generate internalities and externalities, and thus, inefficiencies, these results can justify individual, social, and government interventions, for example in lifestyle, and the education, health, pension, and insurance markets. It is argued that this approach can be a complement to the worldwide efforts to improve the coverage and sustainability of the health and pension systems; help explain the so-called Easterlin paradox, and contribute to the wellness set point debate in psychology.
    Keywords: lifetime welfare; individual welfare trend curve; welfare smoothing; marginal rate of welfare trend change; social welfare trends function and frontier; and Easterlin paradox.
    JEL: D11 D60 D62 D70
    Date: 2024–05–16

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