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on Economics of Ageing |
| By: | Cristina Bellés-Obrero; Manuel Flores; Pilar García-Gómez; Sergi Jiménez-Martín; Judit Vall-Castelló |
| Abstract: | Spain, with one of the highest life expectancies globally and a rapidly ageing population, faces growing challenges in sustaining its pension, healthcare, and long-term care systems. This study examines trends in health inequalities among retired Spaniards from 2004 to 2022, using eight waves of the Survey of Health, Ageing and Retirement in Europe (SHARE). We analyse five health outcomes—limitations in daily and instrumental activities, number of chronic conditions, a composite health deficiency index, mental health (EURO-D scale), and cognitive performance—and use linear regression to assess income-related gradients, adjusted for age and sex. We also compute a catch-up time measure—the number of years a poorer individual would need to reach the same level of health as a richer individual—and concentration indices of bad health. We then examine how these inequalities change over time, allowing us to explore the potential influence of pension reforms within the context of Spain’s Beveridge-style healthcare system and tax-funded long-term care provision. Our results show no clear evidence that health inequality has increased from 2004 to 2022. These findings contribute to understanding how income disparities interact with social protection systems in ageing societies and inform the design of equitable health, long-term care, andpension policies |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaeee:eee2025-26 |
| By: | Cristina Bellés-Obrero; Sergi Jiménez-Martín; Han Ye |
| Abstract: | This paper studies the mortality effects of delaying retirement by leveraging the 1967 Spanish pension reform, which exogenously increased the earliest voluntary claiming age from 60 to 65 based on individuals’ date of first contribution. Using Spanish administrative data, we find that removing access to early retirement delays age at last employment by 4 months and increases the probability of death between ages 60 and 69 by 11 percent. The mortality effects are concentrated among workers in physically demanding, high-psychosocial-burden, and low- skilled occupations, while men and women are affected similarly. Access to flexible retirement mitigates the adverse effects of delaying retirement. |
| Keywords: | heterogeneity , mortality , early retirement , delaying retirement , work conditions |
| JEL: | I10 I12 J14 J26 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:upf:upfgen:1924 |
| By: | Edward Lane |
| Abstract: | he Social Security "full retirement age" (FRA) is the age at which retirement income benefits are available without reduction for early commencement. Presently, that age is 67 for those born in 1960 or later. This paper is about the unfair and unnecessary threat to reduce Social Security retirement income benefits (Romig 2023) by extending the full benefit retirement age--a change that will affect upwards of 80 percent of future retirees (Ross 2024), most of whom can ill-afford the reduction (Romig 2023). For those who don't follow these issues closely, the Social Security retirement, or Old-Age & Survivors Insurance (OASI) Trust Fund is projected to become insolvent in 2033. Without Congressional action to preserve scheduled benefits, payable benefits would then be reduced by 20-25 percent. While both President Trump (Bolton 2024) and House Speaker Mike Johnson (Murray et al. 2025) have promised not to cut Social Security at a time when there is intense political pressure to reduce the federal budget deficit (Duehren 2025), it is unclear what will happen once Congress settles on a fiscal 2026 budget and the president signs off. If benefits are not reduced, the trust fund insolvency issue must still be resolved. To better understand why extending Social Security's FRA would be both unnecessary and unfair, this paper briefly explores Social Security's history, how Social Security payroll taxes subsidize other government expenditures, and how attempts are being made to roll back Social Security retirement benefit eligibility while other publicly funded retirement programs covering government employees have far more generous retirement eligibility provisions. The paper will conclude with recommendations to avoid program insolvency while preserving the FRA. |
| Keywords: | Social Security; FICA; Taxes; Trust Funds; OASI; OASDI; Medicare; Deficit; Inflation; Welfare; Treasury; Old-age; Intragovernmental and Federal debt; Retirement age |
| JEL: | H00 H50 H51 H53 H55 H61 H62 H63 H21 H22 H23 H24 H31 E62 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1080 |
| By: | Andreas Irmen (DEM, Université du Luxembourg); Maria Krelifa (DEM, Université du Luxembourg); Johanna Kuehnel (University of Heidelberg, DE) |
| Abstract: | This paper investigates how population ageing affects economic growth by altering the composition of government expenditure. We develop and test an original political economy model in which an aging population shifts the preferences of the median voter, leading to increased elderly spending at the expense of private investment, thus reducing growth. The model yields three predictions: population ageing (i) raises elderly spending (as a share of output); (ii) does not significantly affect productive expenditure; and (iii) lowers economic growth. Using OECD data from 2007-2018 and both OLS and IV regression analyses, we find strong support for prediction (i): population ageing significantly increases spending on “old age” and “hospital services.” Consistent with (ii), there is no significant impact on “tertiary education, ” “transport, ” “communication, ” or “R&D.” Finally, using GMMbased estimation with a broader sample of 178 countries, we confirm prediction (iii): healthcare expenditure negatively affects growth. |
| Keywords: | "ageing, demographics, endogenous economic growth, generalised method of moments, government spending, median voter." |
| JEL: | D72 E62 H40 J10 O40 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:25-15 |
| By: | Philippe d’Astous; Vyacheslav Mikhed; Sahil Raina; Barry Scholnick |
| Abstract: | Using wealth windfalls from lottery winnings and matched employer-employee tax files, we compare the effect of additional wealth on the entrepreneurial activity of older and younger individuals. We find that additional wealth leads older winners (aged 55 to 64) to reduce business ownership and growth (as measured by sales, revenue, and employees). In contrast, extra wealth increases younger winners’ (aged 21 to 54) business ownership, but it has no effect on their business growth. The increase in business activity of a young winner does not offset the negative growth for an older winner, which may hurt economic growth. |
| Keywords: | Wealth; Age; Entrepreneurship; Retirement |
| JEL: | G5 G51 J22 L26 |
| Date: | 2025–10–21 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:101992 |
| By: | René Morissette; Feng Hou |
| Abstract: | As Canada’s population gets older and life expectancy keeps increasing, Canadian-born and immigrant seniors may alleviate downward pressures on the overall employment rate through their involvement in the labour market. Many seniors work past their mid-60s for various reasons. Some find it necessary to keep working because of inadequate retirement savings, mortgage payments, unforeseen expenses, or the responsibility to support children and other family members in Canada or abroad. Others choose to work to provide a sense of personal fulfillment, stay active and remain engaged. Working by choice rather than necessity may have important implications for the well-being of seniors. Furthermore, data on employment by choice and necessity may help employers and policy makers understand the factors that influence seniors’ retirement decisions. To shed light on this issue, this article uses data from the Labour Force Survey (LFS) and examines the degree to which Canadian-born and immigrant seniors aged 65 to 74 worked by choice or necessity in 2022 |
| Keywords: | employment, immigrant, seniors, labour market |
| JEL: | J23 M21 |
| Date: | 2024–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:202400400002e |
| By: | Pashchenko, Svetlana; Porapakkarm, Ponpoje |
| Abstract: | Three key drivers of savings are life-cycle, precautionary, and bequest motives. What is their relative quantitative importance? We revisit this question focusing on the role of preferences and institutions. We address the challenge of disentangling the effects of different saving motives on one’s decisions by considering many aspects of people’s behavior both before and after retirement. We illustrate why this approach is informative about the underlying preference parameters, and hence allows us to uncover the relative strength of different motives. Our decomposition exercises reveal that bequest motive is the key driver of savings starting from the middle-age and long before retirement. We also find that life-cycle motive and precautionary motive due to medical expense shocks play a minor role. The former result is due the crowding out effect of Social Security. The latter is due to the combined effect of health insurance and the means-tested transfers. |
| Keywords: | savings, self-insurance, bequest motives, life-cycle models, medical spending, social security claiming |
| JEL: | D52 D91 E21 H53 I13 I18 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125799 |
| By: | Liran Einav; Amy Finkelstein |
| Abstract: | What is the optimal path of Social Security benefits for an individual who has retired with a stock of wealth, faces stochastic mortality, and has no access to annuities and no preferences for bequests? It is a deferred annuity in which the government annuity pays out zero for some periods and a constant amount after that. The optimal length of the deferral period is increasing in the retiree's initial wealth and in their survival probability. |
| JEL: | H55 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34384 |
| By: | Konradt, Maximilian |
| Abstract: | This paper studies the impact of low interest rates on pension fund risk-taking. I assemble a new cross-country dataset encompassing portfolio holdings of over 100 large pension funds. The data reveal that pension funds increased their exposure to riskier asset classes, such as equities and alternatives, in the low interest rate period after the global financial crisis. Using an instrumental variables approach, I estimate that pension funds increase their exposure to risky assets when domestic interest rates fall. A 25 basis point decline in interest rates is associated with a 0.51 percentage point increase in pension funds’ share of risky assets. This behavior is most pronounced for mature and underfunded pension funds, facing greater pressure to generate returns. |
| Keywords: | Low interest rates, pension funds, risk-taking, alternative investments |
| JEL: | E43 F21 G11 G23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126443 |
| By: | Aravena, José M. (Yale University); Chen, Xi (Yale University); Levy, Becca R. (Yale University) |
| Abstract: | The influence of genetic risk on dementia can be shaped by social environments. Following older adults without dementia at baseline for 12 years in two large cohorts—Health and Retirement Study (HRS) and English Longitudinal Study of Ageing (ELSA), we examine how APOE alleles interact with social adversity to determine dementia risk. A social adversity index is constructed based on five domains of social determinants of health outlined in the Healthy People 2030: education access, economic stability, healthcare quality, neighborhood environment, and social context. Participants are classified as having low (APOE-?2), intermediate (APOE-?3/?3), or high (APOE-?4) genetic risk of dementia. Dementia is ascertained via clinical diagnosis, cognitive testing, or validated caregiver report. Genetic effects are most pronounced among individuals with social advantage. In contrast, those experiencing high social adversity have elevated dementia risk regardless of genotype. Notably, individuals with high genetic risk but social advantage have lower dementia risks than those with low genetic risk but high social adversity. Addressing social adversity may reduce dementia risk across genotypes and enhance equity in dementia prevention. |
| Keywords: | dementia, genotype, genetic risk, social advantage, social adversity, United States, United Kingdom |
| JEL: | I14 I24 I10 J14 J15 H75 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18223 |
| By: | Joseph Kopecky (Department of Economics, Trinity College Dublin); Giacomo Mangiante (Bank of Italy) |
| Abstract: | How does the population age structure affect monetary policy? With advanced economies experiencing increased inflation risk and sluggish growth, it is more important than ever to understand how the monetary toolbox transmits to the outcomes that policymakers wish to affect. Studying a long run panel of countries, we identify the impact of changing population age structures on the effectiveness of monetary policy transmission to the economy. These shocks are identified using a recently proposed trilemma instrument for quasi-exogenous change in policy rates. On the one hand, we provide strong empirical evidence for a relationship between age structure and the transmission of interest rate shocks to CPI inflation, with young populations reducing this transmission, middle-aged ones reinforcing it, and older retirees strongly reducing it again. We observe the same pattern for nominal wages and real house prices. On the other hand, population aging is found to have transitory effects on the responsiveness of real aggregate variables such as, output, consumption, and investment with older populations delaying the impact of monetary policy. We find no impact on transmission to unemployment. These results have potentially important implications for the conduct of policy, particularly in the current environment where central bankers must frequently choose between their inflation and full employment targets. |
| Keywords: | Monetary Policy Transmission; Demographic Change |
| JEL: | E50 E52 J11 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep1725 |
| By: | Aravena, José M.; Chen, Xi; Levy, Becca R. |
| Abstract: | While most dementia prevention strategies and risk prediction models emphasize biomedical and genetic factors, the influence of genetic risk on dementia also appears shaped by social environments. Following older adults without dementia at baseline for up to 12 years in two large cohort studies-the Health and Retirement Study (HRS) and the English Longitudinal Study of Ageing (ELSA), we examine how APOE alleles interact with social adversity to determine dementia risk. A social adversity index is constructed based on the five domains of social determinants of health outlined in the US Healthy People 2030 framework: education access, economic stability, healthcare quality, neighborhood environment, and social context. Participants are classified as having low (APOE-e2), intermediate (APOE-e3/e3), or high (APOE-e4) genetic risk of dementia. Dementia is ascertained via clinical diagnosis, cognitive testing, or validated caregiver report. Cox proportional hazards models are used in each cohort, and estimates were pooled using random effects adjusting for covariates. Genetic effects are most pronounced among individuals with social advantage. In contrast, those experiencing high social adversity have elevated dementia risk regardless of genotype. Notably, individuals with high genetic risk but social advantage have lower dementia risks than those with low genetic risk but high social adversity. Addressing social adversity may reduce dementia risk across genotypes and enhance equity in dementia prevention strategies. |
| Keywords: | Social Adversity, Social Advantage, Genetic Risk, Genotype, Dementia, United States, United Kingdom |
| JEL: | I14 I24 I10 J14 J15 H75 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1681 |
| By: | FUJIKI, Hiroshi |
| Abstract: | This paper examines the future evolution of cash demand in Japan, amid rapid demographic aging and the increasing adoption of cashless payments. Despite a decline in cash use for daily transactions, aggregate cash demand has remained stable, likely due to cash hoarding by older generations. Using survey data from 2021 that separates cash held for daily use and hoarding purposes by age group, we project cash demand through 2070. Our baseline scenario assumes constant cash-holding behavior by cohort, while an alternative scenario incorporates reductions reflecting the spread of cashless payments. Adjustments for the underrepresentation of high-cash-holding households are made using methodologies from the distributional national wealth literature, which employs Pareto distributions to align microdata with aggregate statistics. Results suggest that cash on hand (COH) will decline by 1.5%–2.4% annually, and cash at home (CAH) by about 1% annually. The rate of decrease in cash demand is faster than the population decrease of 0.7%, as we assume that future older individuals will hoard less cash than current older individuals, and future younger individuals will use less cash for day-to-day payment due to the spread of cashless payments. We find that a 1% rise in deposit rates would cause a 20% decrease in CAH demand, a much stronger effect than demographic aging. Finally, we discuss the implications for the Bank of Japan’s balance sheet, as declining cash demand could increase the Bank’s cost burden during monetary tightening. |
| Keywords: | cash demand, population aging, demographic changes, cashless payment methods, cash hoarding |
| Date: | 2025–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-145 |
| By: | Westerhout, Ed (Tilburg University, Center For Economic Research) |
| Keywords: | population ageing; health care expenditure growth; health insurance; medical-technological progress |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiucen:ccc1a0c2-de43-4dd3-97bd-1782023c63df |
| By: | Pablo Garcia-Sanchez (Banque centrale du Luxembourg, Departement Economie et Recherche); Olivier Pierrard (Banque centrale du Luxembourg, Departement Economie et Recherche) |
| Abstract: | Income and life expectancy are strongly correlated, yet the mechanisms underlying this relationship remain debated. This paper develops a structural model in which both variables are endogenous and jointly determined. Calibrated to U.S. data, the model replicates the income-longevity gradient and the distribution of age at death. It highlights the importance of both the health-to-income and income-to-health channels in accounting for these empirical patterns. Our model also offers a more cautious assessment of income redistribution policies than empirical studies, showing that redistribution can weaken incentives for preventive care and increase mortality risk. By contrast, lowering the price of preventive care through subsidies promotes better health and longer lives. |
| Keywords: | Health, Income, Inequality, Redistribution, Subsidy |
| JEL: | C60 D15 H24 H51 I12 I14 |
| Date: | 2025–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:ctl:louvir:2025016 |
| By: | Lydia J. Gabric; Kenneth Q. Zhou |
| Abstract: | Natural hedging allows life insurers to manage longevity risk internally by offsetting the opposite exposures of life insurance and annuity liabilities. Although many studies have proposed natural hedging strategies under different settings, calibration methods, and mortality models, a unified framework for constructing and evaluating such hedges remains undeveloped. While graphical risk assessment has been explored for index-based longevity hedges, no comparable metric exists for natural hedging. This paper proposes a structured natural hedging framework paired with a graphical risk metric for hedge evaluation. The framework integrates valuation, calibration, and evaluation, while the graphical metric provides intuitive insights into residual dependencies and hedge performance. Applied to multiple hedging scenarios, the proposed methods demonstrate flexibility, interpretability, and practical value for longevity risk management. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.18721 |