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on Economics of Ageing |
| By: | Bosch, Mariano; Rojas Valero, Paola Nelly |
| Abstract: | Using census microdata from 78 countries, we study how pension systems shape labor supply at older ages. While male employment rates are similar in midlife, they diverge sharply later in life: by age 75, 54% of men remain employed in low-income countries compared with 8% in high-income ones, with even larger gaps among those with lower education. Patterns for women are similar. Exploiting variation in retirement ages and pension coverage, we find that a 10-percentage-point increase in coverage reduces post-retirement employment by 2.1 percentage points. Limited pension access keeps many lower educated workers from retiring, driving global disparities in late-life employment. |
| JEL: | D14 J14 H55 J26 J32 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14576 |
| By: | Nicolò Russo; Rory McGee; Mariacristina De Nardi; Margherita Borella; Ross Abram |
| Abstract: | Health shapes a broad set of later-life outcomes that are central to macroeconomics and public policy, including disability receipt, retirement, long-term care use, and survival. Yet we know little about how much differences in midlife health contribute to disparities in these outcomes later in life by race, ethnicity, and gender. Using the Health and Retirement Study, we construct a measure of health based on frailty and document large disparities at midlife. Black men and women have frailty levels at age 55 comparable to those of White men and women who are 13 and 20 years older, respectively, while the corresponding gaps for Hispanic men and women are 8 and 12 years. We then estimate a dynamic system linking health at age 55 to subsequent outcomes. Equalizing the distribution of health at age 55 across groups substantially reduces disparities in time spent in poor health, disability benefit receipt, and nursing home residence. Importantly, midlife health can account for later-life disparities more than education, health insurance coverage, and marital status jointly. |
| Keywords: | Health inequality, economic outcomes, economic inequality |
| JEL: | I10 D10 D13 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26127 |
| By: | Andrew Binning; Murat Özbilgin; Christie Smith (The Treasury) |
| Abstract: | New Zealand’s population is ageing. Public spending on public pensions (NZ Superannuation) and health are particularly sensitive to this trend and are expected to increase accordingly. Current and future government policies aimed at addressing this challenge will not only influence macroeconomic outcomes and growth, but also generate distributional effects both within and across generations. This paper constructs an overlapping generations (OLG) model for New Zealand to analyse these issues. We show that the model replicates both macroeconomic and fiscal moments for the New Zealand economy. We then approximate Stats NZ’s median demographic projections to trace the rising trajectory of government expenditures driven by population ageing. The model suggests that significant policy adjustments will be required regardless of the rate of technological progress, and that more favourable demographic scenarios offer only partial and temporary relief. This paper forms part of a series of papers using Treasury’s OLG model to investigate the fiscal impacts of New Zealand’s ageing population. Other papers in the series look at the implications of tax and debt financing demographics-driven increases in health and pension spending, and the savings from pension reforms and spending restraint, amongst other issues. |
| Keywords: | Overlapping generations models; fiscal policy; fiscal sustainability; demographics; superannuation; pensions; public debt |
| JEL: | E62 H31 H55 H62 H63 |
| Date: | 2026–03–30 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nztwps:wp26/01 |
| By: | Lee, Ajin (University of California - Riverside); Rossin-Slater, Maya (Stanford University); Staiger, Becky (University of California - Berkeley); Su, Amanda (Stanford University) |
| Abstract: | An aging US population has raised important questions regarding the organization, delivery, and funding of long-term services and supports (LTSS), prompting many state Medicaid programs to shift from fee-for-service to managed care models for LTSS delivery. We analyze the effects of transitioning to managed LTSS (MLTSS) on health outcomes among dual-eligible Medicare-Medicaid beneficiaries aged 65 and older in Florida and New York. Using Medicare claims data and a differences-in-differences design leveraging county-by-county MLTSS rollouts, we find that MLTSS leads to a 4.2 percent increase in hospitalizations in Florida, but no significant change in New York. Analysis of preventive care suggests that declining flu vaccination rates in Florida may have contributed to increased hospitalizations from respiratory causes. These findings highlight important differences in MLTSS effects across states and underscore the value of Medicare data for measuring health effects in the dual-eligible population. |
| Keywords: | long-term services and supports, Medicaid managed care, dual-eligible population |
| JEL: | H51 H75 I13 I18 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18628 |
| By: | Qian, Yuting (Yale University); Li, Fan (Yale University); Chen, Xi (Yale University) |
| Abstract: | Racial and ethnic minorities are substantially less likely to receive timely dementia diagnoses, yet the factors underlying these gaps remain poorly quantified. Using nationally representative Health and Retirement Study data linked to Medicare claims and National Neighborhood Data Archive, we examine racial and ethnic disparities in timely dementia diagnosis among U.S. older adults and decompose these gaps using causal mediation analysis. Controlling for demographics and health conditions, non-Hispanic Black and Hispanic individuals are less likely than non-Hispanic White individuals to receive a timely diagnosis. Educational attainment is the dominant mediator, explaining 48% of the Black–White disparity and 62% of the Hispanic–White disparity, followed by neighborhood affluence (27% and 18%, respectively) and the density of non-physician health practitioner offices (16% and 15%) and physician offices (10% and 12%). Dementia specialist evaluation accounts for a further 7% and 6%, respectively. These findings identify education and neighborhood healthcare infrastructure as the primary structural determinants of racial and ethnic gaps in dementia detection, pointing to targeted policy interventions to advance diagnostic equity. |
| Keywords: | timely dementia diagnosis, disparities, education, neighborhood socioeconomic factors, health care access |
| JEL: | I14 J15 J14 I11 I18 C35 R23 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18619 |
| By: | Jacob Arendt; Iben Bolvig |
| Abstract: | This study estimates the effects of an employment programme for disadvantaged unemployed individuals. The programme emphasized on-the-job training and contracting the unemployed for a few paid work hours as a stepping stone into the labour market. Evaluated through a randomised controlled trial, the programme was found to accelerate transitions into part-time work. Contrary to its intention, it permanently increased the share of participants receiving disability pensions among the most disadvantaged groups. To explain this finding, we suggest that training, while enhancing productivity for some, simultaneously provided information of employability used in the assessment of disability pension eligibility. |
| Keywords: | Unemployed, Active Labour Market Policy, Disability Pension, Immigration |
| JEL: | J14 J15 J64 D61 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26131 |
| By: | Sushmita Kumari; Siddharth Gavhale |
| Abstract: | This paper develops a two-period dynastic overlapping-generations (OLG) model in which parents simultaneously choose consumption, savings, fertility, and three distinct dimensions of child quality-education, physical health, and mental health-under a pay-as-you-go (PAYG) pension system. The central innovation is modelling mental health as an independent productivity-enhancing input with its own elasticity $\theta$ in a Cobb-Douglas human-capital technology. This yields simple proportional allocation rules and shows how pension policy affects not only the overall level but also the composition of human capital investments. In steady state, higher PAYG contribution rates raise fertility through the Yakita effect but crowd out per-child investments in all quality dimensions, including mental health. An increase in the mental-health elasticity $\theta$ shifts resources toward non-cognitive skill development while reducing fertility. These results reveal a fundamental policy tension for developing economies: pension systems that rely on children for old-age support simultaneously increase birth rates while reducing long-term human capital formation, with disproportionate effects on non-cognitive skills. The framework provides theoretical guidance for complementary policies that protect mental-health investments, with particular relevance for countries such as India where children remain a primary source of retirement security and mental-health services are underfunded. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.07377 |
| By: | Nynke de Groot; Bas van der Klaauw |
| Abstract: | Active labor market programs targeted at older unemployed workers are often believed to be ineffective. We exploit a large-scale randomized experiment involving approximately 50, 000 older unemployed workers to evaluate an intensive job search assistance program that focuses on exploiting the social network. Participation in the program increases exits from unemployment insurance by 4.4 percentage points. Program participation reduces cumulative benefit payments by about €715, exceeding the program costs of €470. Participants compensate the reduced benefits receipt with higher earnings. We find that participants change their job search behavior according to the content of the program, and that both the trainer and the training group composition affect the program effectiveness. |
| Keywords: | Randomized experiment, older unemployed workers, ALMP, job search assistance, social network |
| JEL: | C93 J14 J64 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26132 |
| By: | Andrew Binning; Murat Özbilgin; Christie Smith; Hanna Vu (The Treasury) |
| Abstract: | New Zealand, like many advanced economies, faces long-term fiscal pressures arising from population ageing. Over coming decades, demographic change is projected to increase government expenditure on New Zealand Superannuation and public health care relative to the size of the economy. Addressing these pressures will require policy choices about how government revenue, expenditure, and public debt evolve over time. This Analytical Note is one of a series of background papers that informed the Treasury’s 2025 Long-term Fiscal Statement (LTFS). The LTFS considers a wide range of possible responses to long-term fiscal pressures, including changes to revenue, expenditure, and the design of major government programmes. The background papers supporting the LTFS provide more technical detail on particular modelling approaches and policy scenarios, complementing the more accessible analysis presented in the LTFS itself. In this paper we use the Treasury’s overlapping generations (OLG) model to describe the macroeconomic, fiscal, and distributional effects of strategies that adjust tax policies to ensure fiscal sustainability in the face of rising pension and health expenditure. The scenarios presented are hypothetical analytical exercises designed to illustrate the mechanisms at play within the model rather than represent specific policy proposals. New Zealand raises the bulk of its tax revenue from labour income, consumption expenditure, and capital income, with source deductions on labour income representing the largest source of tax revenue. In this paper we meet expenditure pressures by deploying labour income tax strategies that vary in their degree of progressivity. In all scenarios, tax rates adjust over time to fund projected increases in pension and health spending and to stabilise the government debt-to-GDP ratio. The paper compares four stylised tax strategies: a Baseline strategy where marginal tax rates increase by the same percentage point amounts across all income brackets; a Current progressivity strategy that broadly preserves the current degree of progressivity in the tax system (as represented by the ratios of labour tax rates); an Increased progressivity strategy where the lowest tax rate is held constant while higher tax brackets increase; and a Reduced progressivity adjustment where relatively larger increases occur in lower tax brackets. The modelling highlights several mechanisms relevant to long-term fiscal policy. In particular, the distribution of income across tax brackets affects the size of the tax bases available to fund increased expenditure. The model indicates that changes to labour taxes could suffice to meet expenditure pressures arising from an ageing population, but that tax increases would need to be shared across tax brackets because the share of labour income in the highest two tax brackets is not large enough to fund the entire projected increase in expenditure. The alternative tax strategies explored in the paper result in different macroeconomic and fiscal outcomes. The model suggests that more progressive increases in marginal tax rates on labour income tend to be more distortionary, leading to larger reductions in labour supply, capital accumulation, and economic activity than strategies that spread tax increases more broadly across the labour income tax base. In the model, less progressive tax increases generate higher effective labour supply, higher per capita capital, and higher aggregate income and consumption in the long run. While the model highlights the efficiency implications of different tax structures, there are also other well-established reasons why governments may choose to maintain progressive tax systems, including redistribution or equity considerations, and the role progressive taxation can play in providing insurance against income risk. These considerations are important but are not the primary focus of the analysis presented in this note. The OLG framework also enables us to examine how alternative tax strategies affect people with different lifetime income profiles and those born in different years. The results illustrate that different households respond differently to the tax strategies considered, and that the strategies have different consequences for their wellbeing across generations. Importantly, the scenarios examined in this paper consider only one dimension of the broader set of policy choices discussed in the LTFS. Governments have a range of potential tools available to address long-term fiscal pressures, including changes to spending programmes, eligibility settings, the mix of taxes used to raise revenue, and policies that influence economic growth and labour force participation. The purpose of this note is therefore to provide technical insight into how different labour income tax structures interact with demographic change within our modelling framework. Together with the other background papers released alongside the LTFS, this analysis contributes to the evidence base supporting public discussion of New Zealand’s long-term fiscal sustainability. |
| JEL: | H24 H3 |
| Date: | 2026–03–30 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nztans:an26/04 |
| By: | Ángel de la Fuente |
| Abstract: | Este documento forma parte de la serie de Boletines de seguimiento de la situación económica y de las medidas de política adoptadas que FEDEA lleva publicando desde el inicio de la pandemia. El presente informe se dedica a las reformas recogidas en el Plan de Recuperación y otras medidas estructurales enviadas a las Cortes para su tramitación durante el último año. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaeee:eee2026-17 |
| By: | Susan St John |
| Abstract: | This PIE working paper updates New Zealand Superannuation as a Basic Income, PensionBriefing 2021-2, Retirement Policy and Research Centre. It models how changing New Zealand Superannuation into a genuine basic income would allow a simple but effective clawback mechanism to operate through the tax system, generating useful revenue to help meet future government expenditure pressures in aged care, pensions, education, poverty reduction and climate change. This update is based on the Half Year Economic and Fiscal Update (HYEFU) 2024 forecasted rates of New Zealand Superannuation (NZS) as at 1 April 2025, incorporating the effect of income tax changes announced in the 2024 Budget. Treasury’s tax and benefit model TAWA (see Appendix 1) is used to estimate the savings on an annualised basis for various special tax schedules for superannuitants and NZS rate scenarios for the year 1 April 2025 to 31 March 2026 (2025/26 tax year). The modelling illustrates that significant savings may be achieved from a suitably progressive separate tax schedule for those who opt onto the basic income, called here the New Zealand Superannuation Grant (NZSG). Alignment of the various rates of NZS may generate additional saving. |
| Keywords: | New Zealand Superannuation; basic income; retirement income; social policy; New Zealand |
| JEL: | H55 I38 J26 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cyc:wpaper:023 |
| By: | Andrew Binning; Murat Özbilgin; Christie Smith; Hanna Vu (The Treasury) |
| Abstract: | New Zealand, like many advanced economies, faces long-term fiscal pressures arising from population ageing. Over coming decades, demographic change is projected to increase government expenditure on New Zealand Superannuation and public health care relative to the size of the economy. Addressing these pressures will ultimately require policy choices about how government revenue, expenditure, and public debt evolve over time. This Analytical Note is one of a series of background papers that informed the Treasury’s 2025 Long-term Fiscal Statement (LTFS). The LTFS considers a broad range of possible responses to long-term fiscal pressures, including changes to government spending, revenue, and the design of major policy settings. The background papers supporting the LTFS provide additional technical detail on particular modelling approaches and policy scenarios, complementing the more accessible analysis presented in the LTFS itself. In this paper we use the Treasury’s overlapping generations (OLG) model to explore how different tax bases interact with demographic change and fiscal sustainability. The scenarios examined are stylised analytical exercises designed to illustrate the economic mechanisms within the modelling framework rather than represent specific policy proposals. The model assumes that health and pension spending follow projections based on current policy settings, and that tax policy adjusts over time to fund these expenditures and stabilise the government debt-to-GDP ratio. We examine three illustrative fiscal strategies. In the Baseline strategy, increases in expenditure are funded through higher marginal tax rates on labour income. In the GST strategy, expenditure increases are funded through higher consumption taxes. In the Combination strategy, fiscal adjustment is shared across labour income taxes, consumption taxes, and capital income taxes. These alternative strategies highlight how the choice of tax base affects economic behaviour and fiscal outcomes within the model. Taxes influence labour supply, saving, investment, and consumption decisions, which in turn affect economic activity and the size of the tax bases available to fund government spending. Because the labour, consumption, and capital tax bases differ in size and respond differently to taxation, the strategies generate different macroeconomic and fiscal outcomes over the projection horizon. Within the model, strategies that rely entirely on labour income taxation lead to larger reductions in effective labour supply and economic activity over time than strategies that spread fiscal adjustment across other tax bases. Strategies that rely more heavily on consumption taxation or a combination of tax bases tend to generate somewhat stronger labour supply and capital accumulation outcomes in the long run. However, the transition paths and distributional consequences differ across strategies, and households born in different periods and with different lifetime income profiles experience different outcomes. The OLG framework can be used to examine these distributional and intergenerational effects. The model shows that the alternative fiscal strategies have different implications for households with different lifetime income levels and for people born in different years. Some strategies impose larger adjustment costs on households currently alive, while others shift more of the fiscal adjustment toward future generations. While the analysis highlights the efficiency implications of different tax bases within the model, governments may pursue particular tax structures for a range of reasons, including redistribution or equity considerations, and administrative or political constraints. These broader considerations are outside the scope of this Analytical Note. The purpose of this paper is instead to provide technical insight into how alternative tax bases interact with demographic change within our OLG modelling framework. Together with the other background papers released alongside the LTFS, it contributes to the evidence base supporting discussion of New Zealand’s long-term fiscal sustainability. |
| JEL: | H24 H3 |
| Date: | 2026–03–30 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nztans:an26/03 |
| By: | Philipp Dierker (Max Planck Institute for Demographic Research, Rostock, Germany); Vegard F. Skirbekk (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Gray divorce (marital dissolution after age 50) has risen across most countries, yet relatively little is known about how grandparenthood may stabilize marriages in later life. Drawing on harmonized Generations and Gender Survey data from 15 countries spanning Europe, East Asia, and Latin America (N=30, 187 parents still married at age 50), we examine whether the transition to grandparenthood is associated with a lower risk of marital dissolution. Using cause-specific Cox proportional hazards models with grandparent status specified as a time-varying covariate and widowhood treated as a competing risk, we find that grandparents face a substantially lower hazard of marital dissolution than those who have not yet become grandparents (adjusted HR=0.81, 95% CI 0.71-0.94). This protective association persists net of birth cohort and marriage duration and is broadly consistent across the 15 national contexts examined, though with substantial cross-national variation. The elevated raw hazard of widowhood among grandparents likely reflects cohort composition rather than a direct grandparenthood effect. The protective association is directionally consistent in 13 of the 15 national contexts examined, and is strongest in contexts where filial norms and divorce stigma are more pronounced, notably in Taiwan and several Eastern European countries. |
| Keywords: | ageing, divorce, fertility |
| JEL: | J1 Z0 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:dem:wpaper:wp-2026-015 |
| By: | Sylwia Radomska (Institute of Economics, Polish Academy of Sciences (INE PAN) and Group for Research in Applied Economics (GRAPE)) |
| Abstract: | This paper studies optimal intergenerational transfers when altruistic parents can transfer resources to their children through financial bequests or through investment in human capital. The key distinction is that education is a productive transfer: it changes the mapping from privately observed ability to output, whereas bequests are budgetary transfers. The paper characterizes how this distinction affects information rents in a dynastic Mirrlees environment. The main result is a decomposition of the informational effect of education relative to bequests. With endogenous labor supply, both instruments affect incentive provision through marginal-utility and labor-supply responses. Education, however, generates an additional productivity-rent component governed by the cross-partial between ability and human capital in production. This component is absent for purely budgetary transfers. When ability and human capital are sufficiently complementary, the productivity-rent component can dominate the standard labor-requirement channel, so that education may be optimally distorted downward relative to the bequest margin. The analysis clarifies why education and bequests are not equivalent instruments of intergenerational redistribution. The difference is not only that education has risky returns, but also that it changes the sensitivity of output to privately observed ability. This distinction provides a force that can work against the standard education-subsidy logic in Mirrlees models. |
| Keywords: | optimal taxation; intergenerational transfers; human capital; financial bequests; private information; education wedge; ability risk. |
| JEL: | D64 D82 H21 H24 I26 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:115 |