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on Economics of Ageing |
| By: | Ulrike Famira-Mühlberger (WIFO); Thomas Horvath; Thomas Leoni (University of Applied Sciences Wiener Neustadt); Martin Spielauer (WIFO); Viktoria Szenkurök (WIFO); Philipp Warum (WIFO) |
| Abstract: | Europe's demographic shift is putting increasing pressure on long-term care (LTC) systems and raising concerns about the sustainability of LTC financing. This paper analyses Austria's LTC system, particularly its universal long-term care allowance (LTCA), and uses a dynamic microsimulation model to project LTCA expenditure under four scenarios up to the year 2080. Using pooled data from the Survey of Health, Ageing and Retirement in Europe (SHARE), we estimate care needs and prevalence rates across all seven care allowance levels. This enables us to project both public spending and individual lifetime costs, disaggregated by sex and education. Although total LTCA expenditure is projected to rise due to population ageing, scenario comparisons show that compositional shifts – such as higher educational attainment, which is linked to lower care needs, and gains in healthy life expectancy accompanying mortality im- provements – can significantly mitigate cost growth. The projected total expenditure increases range from 29 percent in a scenario where increasing life expectancy – as assumed in official population projections – is neglected, to 185 percent in a scenario accounting for rising life expectancy but no future health gains. The findings also highlight the impact of longevity and education on the distribution of individual lifetime costs. Beyond its policy implications for LTC planning, the study demonstrates the advantages of dynamic microsimulation in capturing individual-level heterogeneity, offering a significant improvement on traditional macrosimulation approaches. |
| Date: | 2025–05–26 |
| URL: | https://d.repec.org/n?u=RePEc:wfo:wpaper:y:2025:i:705 |
| By: | Abdoulaye Ndiaye; Zhixiu Yu |
| Abstract: | Raising the retirement age is a common policy response when social security schemes face fiscal pressures. We develop and estimate a dynamic life cycle model to study optimal retirement and tax policy when individuals face health shocks and income risk and make endogenous retirement decisions. The model incorporates key features of Social Security, Medicare, income taxation, and savings incentives and distinguishes three channels through which health affects retirement: nonconvexities in labor supply due to health-dependent fixed costs of working, earnings reductions, and mortality risk. We estimate our model to match US microdata and show that labor supply nonconvexities play a dominant role in driving early retirement, making rigid increases in the retirement age welfare reducing. In contrast, more flexible policies, such as increasing the dependence of Social Security benefits on the claiming age, can improve welfare and pay for themselves with a fiscal surplus. We map a range of policy reforms to their marginal values of public funds (MVPFs), showing that certain incentives to delay claiming offer MVPFs of infinity while broad-based retirement age increases have negative willingness-to-pay. These findings offer novel retirement policy prescriptions and challenge the prevailing emphasis on raising the retirement age. |
| Keywords: | flexible retirement, optimal taxation, social security reform, life cycle model, health shocks, retirement decisions, marginal value of public funds (MVPF), labor supply nonconvexities, mortality risk, medicare |
| JEL: | H21 H55 J26 D15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11904 |
| By: | Noguchi, Soma |
| Abstract: | This study examines a new pension system in which pension benefits increase in proportion to the number of children. We demonstrate that transitioning to this new pension system can be achieved as a Pareto improvement. Additionally, we show that under certain conditions, the population may not decline within this system. |
| Keywords: | OLG, fertility, PAYG, pension, population. |
| JEL: | D91 H55 J13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124685 |
| By: | Aydemir, Abdurrahman B. (Sabanci University); Ersan, Yasar (Ankara University) |
| Abstract: | We examine the causal effect of education on financial outcomes related to stock markets and retirement savings, leveraging a major compulsory school reform and a unique data set covering the universe of investors in Türkiye. The estimates show no effects on participation rates, portfolio composition, or return performance. Moreover, education does not appear to influence behavioral biases or heuristics in retirement plans. The reform leads to a 3% increase in pension savings for females, with no significant effect on males. Higher earnings and increased employment with employer-sponsored pension plans appear as potential mechanisms driving the wealth effect. |
| Keywords: | Wealth, Retirement, Education, Investment Decisions |
| JEL: | I21 I26 G11 G41 G50 G53 J32 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17927 |
| By: | Alessandro Feraldi (Max Planck Institute for Demographic Research, Rostock, Germany); Christian Dudel (Max Planck Institute for Demographic Research, Rostock, Germany) |
| JEL: | J1 Z0 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dem:wpaper:wp-2025-017 |
| By: | Noguchi, Soma |
| Abstract: | This study investigates the effects of increased tax rates on fertility decisions, pension benefits, and unemployment benefits in an economy with both a pay-as-you-go (PAYG) pension system and unemployment insurance. By incorporating voluntary unemployment, the model highlights how higher tax rates reduce households’ willingness to work, thereby affecting the social security system through the production channel. The analysis also reveals differing impacts of the two types of labor income taxes. |
| Keywords: | OLG, fertility, PAYG, pension, unemployment. |
| JEL: | D91 H55 J13 J65 |
| Date: | 2025–05–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124671 |
| By: | Sébastien Dambrine (CEPN - Centre d'Economie de l'Université Paris Nord - CNRS - Centre National de la Recherche Scientifique - Université Sorbonne Paris Nord) |
| Abstract: | Cognitive health among older adults remains understudied in middle-income countries. This study provides an empirical analysis of the relationship between social disadvantage and memory impairment in individuals aged 60 and over in Morocco. Using data from the 2014 Moroccan General Population and Housing Census (RGPH), we construct a weighted social disadvantage score inspired by the model of Castiel et al., combining ten vulnerability dimensions including, hancicap, education, housing conditions, access to cultural goods, and occupational status. We assess the effects of this score alongside illiteracy and educational attainment on the probability of reporting memory impairment using a hierarchical Bayesian model corrected for endogeneity, instrumented by age, sex, and region of residence. Results show that a one standard deviation increase in the social disadvantage score is associated with a 312% increase in the probability of reporting memory impairment. Illiteracy also has a strong effect (+61%), greater than that of educational level (+6.3%). These findings highlight the relevance of a multidimensional approach to social vulnerability in cognitive decline prevention policies, particularly through targeted interventions for the most exposed older populations. |
| Abstract: | La santé cognitive des personnes âgées demeure peu étudiée dans les pays à revenu intermédiaire. Cette étude propose une analyse empirique du lien entre précarité sociale et troubles mnésiques chez les personnes de 60 ans et plus au Maroc. À partir des données du RGPH 2014, nous construisons un score pondéré de handicap social, inspiré du modèle de Castiel et al., combinant dix dimensions de vulnérabilité dont l'éducation, conditions de logement, accès aux biens culturels, statut professionnel… Nous étudions ainsi l'effet de ce score ainsi que de l'illettrisme et du niveau d'étude sur la probabilité de déclarer un handicap mnésique au moyen d'un modèle bayésien hiérarchique avec correction de l'endogénéité, instrumenté par l'âge, le sexe et la région de résidence. Les résultats montrent qu'une augmentation d'un écart type du score social est associée à une hausse de 312 % de la probabilité de handicap mnésique. L'illettrisme exerce également un effet marqué (+61 %), supérieur à celui du niveau d'études (+6, 3 %). Ces résultats soulignent l'intérêt d'une approche multidimensionnelle des vulnérabilités sociales dans les politiques de prévention du déclin cognitif, notamment à travers des actions ciblées auprès des populations âgées les plus exposées. |
| Keywords: | Social disadvantage, Social inequalities, Literacy, Elders, Cognitive health, Santé cognitive, Handicap social, Inégalités sociales, Alphabétisation, Personnes âgées |
| Date: | 2025–05–26 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cepnwp:hal-05085770 |
| By: | Aurelien Eyquem (University of Lausanne, CH); Masashige Hamano (Waseda university, Tokyo, JP and Université du Luxembourg (Extramural Research Fellow)) |
| Abstract: | A tractable model with heterogeneous households is proposed to analyze the two-way interactions between demographic and macroeconomic variables. Total population and labor-market participation are both endogenous and affected by economic as well as demographic factors. We perform a quantitative exercise focusing on trend dynamics based on Japanese data. Our counterfactual analysis reveals the role of labor-market participation costs, sunk costs of raising newborns, and technology progress. |
| Keywords: | Heterogeneous workers, Aging, Productivity, Labor markets. |
| JEL: | E20 J11 J13 J21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:25-06 |
| By: | Andreas Irmen (DEM, Université du Luxembourg); Maria Krelifa (DEM, Université du Luxembourg); Anastasia Litina (University of Macedonia) |
| Abstract: | We study an under-explored implication of population ageing, i. e., its effect on country-level environmental outcomes and on individual-level environmental attitudes. In doing so, we propose a novel classification of country-level environmental outcomes, namely action-requiring and nature-concerning. The borderline between these two categories lies in the level of civic engagement required to fulfill them. Using panel data from a broad set of countries (1995–2018), we find that population ageing is linked to improvements in environmental outcomes that require minimal civic engagement, while it shows no clear association with outcomes that depend on active participation. Analysis of survey data (2006–2016) further suggests that living in ageing societies lowers individuals’ environmental engagement, without affecting underlying environmental concern |
| Keywords: | ageing, environmental policy, individual attitudes, demographic change. |
| JEL: | J10 Q57 Q58 Q59 Z19 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:25-08 |
| By: | Charles Yuji Horioka; Emin Gahramanov; Xueli Tang |
| Abstract: | The purpose of this paper is to conduct a theoretical and empirical analysis of how the behavior of parents and children is affected by the presence or absence of long-term care insurance (LTCI). In our empirical analysis, we use micro data from the Japan Household Panel Survey on Consumer Preferences and Satisfaction (JHPS-CPS), formerly known as the Preference Parameter Study, conducted by Osaka University. Japan is an interesting case to analyze because a public LTCI system was introduced there in 2000. Our analysis shows that, in the case of Japan, if parents are eligible for public LTCI benefits, their children will be less likely to be their primary caregiver and that this, in turn, will reduce their children’s perceived likelihood of receiving a bequest from them. This result implies that bequests are selfishly or strategically motivated (i.e., that parents leave bequests to their children in order to elicit care from them) and that the introduction of a public LTCI system will reduce the likelihood of children providing care to their parents and through this channel reduce their perceived likelihood of receiving a bequest from them. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1250r |
| By: | Weifeng Larry Liu; Warwick J. McKibbin |
| Abstract: | This paper surveys long-term projections of global GDP per capita and presents our own projections through 2050 using a multi-country-multi-sector general equilibrium model (G-Cubed). Existing studies generally agree that global GDP per capita growth will continue to slow in the coming decades, driven by several global challenges such as rapid population ageing, slower technological progress, weaker capital investment, and stagnating educational attainment. Projections tend to be consistent for advanced economies, but vary considerably for developing regions, highlighting the importance of alternative methodologies and assumptions, as well as inherent long-term uncertainty. While existing studies rely on neoclassical mod-els with an aggregate production sector, the G-Cubed model takes a disaggregated approach to projecting productivity and output that accounts for dynamic inter-actions between sectors and across economies. Our projections incorporate the impacts of three fundamental factors: productivity growth, population ageing, and climate change. Productivity growth in advanced economies is expected to slow, but artificial intelligence could counteract the decline and serve as an engine for sustained growth. Population ageing in most advanced economies will continue to constrain labour supply, potentially reducing GDP per capita through changes in age structure. Climate change poses challenges to economic growth through multiple channels, with moderate quantitative impacts by mid-century. The extent to which developing regions can boost productivity, leverage demographic advantages, and navigate climate change will depend on policy choices, as well as governance and institutional improvements. Finally, the paper discusses the implications of geopolitical fragmentation, government debt, and public infrastructure on economic growth. |
| Keywords: | economic growth, long-term projections, productivity growth, population ageing, climate change, artificial intelligence, geopolitical fragmentation, government debt |
| JEL: | O40 O33 C53 C68 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2025-31 |
| By: | Intraligi, Valerio; Biagetti, Marco; Principi, Andrea |
| Abstract: | An expanding body of research documents the adverse impact of heat stress on aggregate employment outcomes, particularly in climate-exposed sectors and occupations. Yet, the role of individual-level heterogeneity-especially for what concerns ageing-remains relatively underexplored. By using Italian individual-level labor market survey data over 2004-2017, this study employs a pseudo panel research design to assess the impact of heath waves on the probability of transitioning in and out of employment for different cohort groups. While preliminary individual-level evidence indicates that heat waves significantly increase the probability of employment exit and decrease the probability of employment entry; controlling for unobservable cohort-province characteristics yields that only older cohorts show a higher probability of employment exit-while only younger ones show a lower probability of entry. These findings provide robust evidence of the vulnerability of older workers to climate-related labor market disruptions, and underscore the importance of integrating age-sensitive dimensions into labor and climate policy frameworks. |
| Keywords: | heat waves, Workforce ageing, Probit model, Pseudo panel, Employment transitions |
| JEL: | C51 C55 J00 Q51 Q54 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:318649 |