nep-dem New Economics Papers
on Demographic Economics
Issue of 2012‒09‒22
thirty-one papers chosen by
Clarence Nkengne Tsimpo
University of Montreal and World Bank Group

  1. China's Gender Imbalance and its Economic Performance By Jane Golley; Rod Tyers
  2. Demographic Dividends, Dependencies and Economic Growth in China and India By Jane Golley; Rod Tyers
  3. The Impact of Social Support Networks on Maternal Employment: A Comparison of West German, East German and Migrant Mothers of Pre-School Children By Mareike Wagner
  4. The Impact of Population Ageing on the Labour Market: Evidence from Overlapping Generations Computable General Equilibrium (OLG-CGE) Model of Scotland (*) By Katerina Lisenkova; Marcel Merette; Robert Wright
  5. The Gender Differences in School Enrolment and Returns to Education in Pakistan By Madeeha Gohar Qureshi
  6. Female Representation but Male Rule? Party Competition and the Political Glass Ceiling By Folke, Olle; Rickne, Johanna
  7. Heterogeneity and Long-Run Changes in U.S. Hours and the Labor Wedge By Simona Cociuba; Alexander Ueberfeldt
  8. HETEROGENEITY IN EXPECTED LONGEVITIES By Josep Pijoan-Mas; José-Víctor Ríos-Rull
  9. Heterogeneity in Expected Longevities By Pijoan-Mas, Josep; Ríos-Rull, José-Víctor
  10. Increasing Life Expectancy and Pay-As-You-Go Pension Systems By Markus Knell
  11. Money or Kindergarten? Distributive Effects of Cash Versus In-Kind Family Transfers for Young Children By Michael Förster; Gerlinde Verbist
  12. Beyond LATE with a discrete instrument. Heterogeneity in the quantity-quality interaction of children By Christian N. Brinch, Magne Mogstad and Matthew Wiswall
  13. Self investments of adolescents and their cognitive development By D. Del Boca; C. Monfardini; C. Nicoletti
  14. The Impact of Social Activities on Cognitive Ageing: Evidence from Eleven European Countries By Dimitrios Christelis; Loreti I. Dobrescu
  15. Sexual Selection, Conspicuous Consumption and Economic Growth By Jason Collins; Boris Baer; Ernst Juerg Weber
  16. Health and Wealth: Short Panel Granger Causality Tests for Developing Countries By Judith A. Clarke; Nilanjana Roy; Weichun Chen
  17. Erasing Class/ (re)Creating Ethnicity: Jobs, Politics, Accumulation and Identity in Kenya By Mwangi wa Githinji
  18. Essays on executive remuneration contracting: Managerial power, corporate payout, and gender discrimination. By Geiler, P.H.M.
  19. Ethnic Segregation in Germany By Albrecht Glitz
  20. Mortality Surface by Means of Continuous Time Cohort Models By Petar Jevtic; Elisa Luciano; Elena Vigna
  21. Impossibility of interpersonal social identity diversification under binary preferences By Naqvi, Nadeem
  22. Migrants, Ethnicity and the Welfare State By Gil S. Epstein
  23. Childcare subsidies and labour supply: evidence from a large Dutch reform By Leon Bettendorf; Egbert Jongen; Paul Muller (University Amsterdam/Tinbergen)
  24. Pensions and ageing in a globalizing world. International spillover effects via trade and factor mobility. By Fedotenkov, I.
  25. English Deficiency and the Native-Immigrant Wage Gap By Alfonso Miranda; Yu Zhu
  26. The Inter-linkages between Democracy and Per Capita GDP Growth: A Cross Country Analysis By Madeeha Gohar Qureshi; Eatzaz Ahmed
  27. Right in Principle and in Practice: A Review of the Social and Economic Returns to Investing in Children By Nicholas Rees; Jingqing Chai; David Anthony
  28. Coverage of Private Pension Systems: Evidence and Policy Options By Pablo Antolin; Stéphanie Payet; Juan Yermo
  29. Long-Term Care and the Housing Market By Bell, David; Rutherford, Alasdair
  30. Stricter employment protection and firms’ incentives to sponsor training: The case of French older workers By Messe, Pierre-Jean; Rouland, Bénédicte
  31. Equilibrium earning premium and pension schemes: The long-run macroeconomic effects of the union By Bruno Chiarini; Paolo Piselli

  1. By: Jane Golley (Centre for China in the World Australian National University); Rod Tyers (Business School, University of Western Australia and Research School of Economics Australian National University)
    Abstract: Chinese GDP growth faces rising handicaps that include the slowdown and eventual contraction of its labour force, a complication of which is its rising sex ratio at birth. The undesirable consequences of the resulting gender imbalance include excessive saving as families with boys compete to match their sons with scarce girls, trafficking in women and rising disaffection and crime amongst the low-skill male population. These are reviewed and analysed using a dynamic model of both economic and demographic behaviour. The results show that the proportion of unmatched low-skill males of reproductive age could be as high as one in four by 2030, with numbers too large for female immigration to be a solution. Policies to rebalance the sex ratio at birth will take decades to reduce the sex ratio at reproductive age and any associated allowance of higher fertility would slow growth in real per capita income. Yet the results suggest that the beneficial effects of reduced male disaffection and crime could outweigh the losses from reduced saving and higher population.
    Date: 2012
  2. By: Jane Golley (Australian Centre On China in the World Australian National University); Rod Tyers (Business School, University of Western Australia)
    Abstract: The world’s two population giants have undergone significant, and significantly different, demographic transitions since the 1950s. The demographic dividends associated with these transitions during the first three decades of this century are examined using a global economic model that incorporates full demographic behavior and measures of dependency that reflect the actual number of workers to non-workers, rather than the number of working aged to non-working aged. While much of China’s demographic dividend now lies in the past, alternative assumptions about future trends in fertility and labor force participation rates are used to demonstrate that China will not necessarily enter a period of “demographic taxation” for at least another decade, if not longer. In contrast with China, much of India’s potential demographic dividend lies in waiting for the decades ahead, with the extent and duration depending critically on a range of policy choices.
    Date: 2012
  3. By: Mareike Wagner
    Abstract: Given shortages in public child care in Germany, this paper asks whether social support with child care and domestic work by spouses, kin and friends can facilitate mothers’ return to full-time or part-time positions within the first six years after birth. Using SOEP data from 1993-2009 and event history analyses for competing risks, the author compares the employment transitions of West German, East German and migrant mothers of pre-school children. The results indicate that West German and migrant mothers return to work sooner if they have access to kin, and that kinship support is particularly important when public child care is unavailable. Furthermore, West German and migrant mothers are more likely to work full-time if their spouses partipate in domestic work. In contrast, social support does not affect employment transitions in East Germany where public child care is more easily accessible and continuous female employment is a prevalent social norm.
    Keywords: Maternal employment, child care, social support
    Date: 2012
  4. By: Katerina Lisenkova (National Institute of Economic and Social Research); Marcel Merette (University of Ottawa); Robert Wright (Department of Economics, University of Strathclyde)
    Abstract: This paper presents a dynamic Overlapping Generations Computable General Equilibrium (OLG-CGE) model of Scotland. The model is used to examine the impact of population ageing on the labour market. More specifically, it is used to evaluate the effects of labour force decline and labour force ageing on key macro-economic variables. The second effect is assumed to operate through age-specific productivity and labour force participation. In the analysis, particular attention is paid to how population ageing impinges on the government expenditure constraint. The basic structure of the model follows in the Auerbach and Kotlikoff tradition. However, the model takes into consideration directly age-specific mortality. This is analogous to “building in†a cohort-component population projection structure to the model, which allows more complex and more realistic demographic scenarios to be considered.
    Keywords: CGE modelling, population ageing, Scotland
    JEL: J11
    Date: 2012–09
  5. By: Madeeha Gohar Qureshi (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: In this study attempt has been made to link the gender differences in parental resource allocation in demand for education at primary, secondary and tertiary level of education to gender differences in returns to education in these respective categories in Pakistan. The hypothesis was that if we find that labour market rewards male more than female then this may be able to give a plausible explanation of why households invest much less in daughter’s education. However our results suggest otherwise that there is under investment in females education at all levels even though returns to education are much higher for females than males. One possible explanation could be that even though private rate of return to time spent in school than in labour market is higher for a female compared to male but the part of return that goes to parents are much lower for daughters than sons in Pakistan due to dependence of parents on their son for old age support. The key factor from policy point of view that can reduce such discriminatory attitude towards female enrolment in a household are found to be education of parents especially mother’s education. Both father’s and mother’s education are found to have significant positive impact on education of both sons and daughters. However mother’s education compared to father has much more impact in terms of magnitude at all levels of education and especially the role is more pronounced for daughters.
    Keywords: Enrolment Rates, Rates of Return, Gender, Pakistan
    JEL: I21 J16
    Date: 2012
  6. By: Folke, Olle (Research Institute of Industrial Economics (IFN)); Rickne, Johanna (Research Institute of Industrial Economics (IFN))
    Abstract: A large literature has studied the context that affects women’s numerical representation, but few have moved beyond numbers to study the drivers of a gender gap in political influence among elected politicians. Using panel data for the careers of 35.000 Swedish municipal politicians over six election cycles we first document the said gender gap. Women are substantially less likely to be re-elected for office, which is the most important pre-condition for obtaining influential appointments. Turing to the determinants we find that supply factors, primarily family responsibilities, explain some of this gap. Meanwhile, demand factors such as experience, age, education and income do not. Finding that competition between political parties closes the gap, we argue that a negative bias against women among party selectors thrives in contexts where meritocracy is not enforced. Positive correlations between competition and measures of competence for elected politicians of both genders further support this conclusion.
    Keywords: Careers in politics; Political competition; Supply of politicians
    JEL: H10 J16 J21 J45
    Date: 2012–09–05
  7. By: Simona Cociuba (University of Western Ontario); Alexander Ueberfeldt (Bank of Canada)
    Abstract: From 1980 until 2007, U.S. average hours worked increased by thirteen percent, due to a large increase in female hours. At the same time, the U.S. labor wedge, measured as the discrepancy between a representative household's marginal rate of substitution between consumption and leisure and the marginal product of labor, declined substantially. We examine these trends in a model with heterogeneous households: married couples, single males and single females. Our quantitative analysis shows that the shrinking gender wage gaps and increasing labor income taxes observed in U.S. data are key determinants of hours and the labor wedge. Changes in our model's labor wedge are driven by distortionary taxes and non-distortionary factors, namely the cross-sectional differences in households' labor supply and productivity. We conclude that the labor wedge measured from a representative household model partly reflects inaccurate household aggregation.
    Keywords: Female and Male Labor Supply; Labor Wedge; Gender Wage Gap; Labor Income Taxation; Household Aggregation
    JEL: E24 H20 H31 J22
    Date: 2012
  8. By: Josep Pijoan-Mas (CEMFI, Centro de Estudios Monetarios y Financieros); José-Víctor Ríos-Rull (University of Minnesota)
    Abstract: We develop a new methodology to compute differences in the expected longevity of individuals who are in different socioeconomic groups at age 50. We deal with the two main problems associated with the standard use of life expectancy: that people's socioeconomic characteristics evolve over the life cycle and that there is a time trend that reduces mortality over time. Using HRS data we uncover an enormous amount of heterogeneity in expected longevities between individuals in different socioeconomic groups. Additionally, our analysis allows us to provide an answer to the old question of how health protecting are education, wealth and marital status. To do so, we decompose the longevity differentials into differences in health at age 50, differences in the evolution of health with age, and differences in mortality conditional on health. Remarkably, the latter is the least important for most socioeconomic characteristics. In particular, education and wealth are health protecting but have very little impact on two-year mortality rates conditional on health. Finally, we document an increasing time trend of the socioeconomic gradient of longevity in the period 1992-2008, and a likely increase in the socioeconomic gradient of mortality rates in the near future. Last but not least, we show that the longevity differences that we find have welfare implications that dwarf the differences in consumption accruing to people in different socioeconomic groups.
    Keywords: Inequality in health, Heterogeneity in mortality rates, Life expectancies.
    JEL: I14 I24 J12 J14
    Date: 2012–09
  9. By: Pijoan-Mas, Josep; Ríos-Rull, José-Víctor
    Abstract: We develop a new methodology to compute differences in the expected longevity of individuals who are in different socioeconomic groups at age 50. We deal with the two main problems associated with the standard use of life expectancy: that people's socioeconomic characteristics evolve over the life cycle and that there is a time trend that reduces mortality over time. Using HRS data we uncover an enormous amount of heterogeneity in expected longevities between individuals in different socioeconomic groups. Additionally, our analysis allows us to provide an answer to the old question of how health protecting are education, wealth and marital status. To do so, we decompose the longevity differentials into differences in health at age 50, differences in the evolution of health with age, and differences in mortality conditional on health. Remarkably, the latter is the least important for most socioeconomic characteristics. In particular, education and wealth are health protecting but have very little impact on two-year mortality rates conditional on health. Finally, we document an increasing time trend of the socioeconomic gradient of longevity in the period 1992-2008, and a likely increase in the socioeconomic gradient of mortality rates in the near future. Last but not least, we show that the longevity differences that we find have welfare implications that dwarf the differences in consumption accruing to people in diefferent socioeconomic groups.
    Keywords: heterogeneity in mortality rates; inequality in health; life expectancies
    JEL: I14 I24 J12 J14
    Date: 2012–09
  10. By: Markus Knell
    Abstract: In this paper I study how PAYG pension systems of the notional defined contribution type can be designed such that they remain financially stable in the presence of increasing life expectancy. For this to happen two crucial parameters must be set in an appropriate way. First, the remaining life expectancy has to be based on a crosssection measure and, second, the notional interest rate has to include a correction for labor force increases that are only due to rises in the retirement age which are necessary to "neutralize" the increase in life expectancy. It is shown that the selfstabilization is effective for various patterns of retirement behavior and also – under certain assumptions – if life expectancy reaches an upper limit. JEL classification: H55, J1, J18, J26
    Keywords: Pension System, Demographic Change, Financial Stability
    Date: 2012–08–28
  11. By: Michael Förster; Gerlinde Verbist
    Abstract: Public support to families with pre-school children can be in the form of cash benefits (e.g. child allowances) or of “in-kind” support (e.g. care services such as kindergartens). The mix of these support measures varies greatly across OECD countries, from a cash / in-kind composition of 10%/90% to 80%/20%. This paper imputes the value of services into an “extended” household income and compares the resulting distributive patterns and the redistributive effect of these two strands of family policies. On average, cash and in-kind transfers each constitute 7 – 8% of the incomes of families with young children. Both instruments are redistributive. Cash transfers reduce child poverty by one third, with the estimated impacts in Austria, Ireland, Sweden, Hungary and Finland performing above average. When services are accounted for, child poverty falls by one quarter and poverty among children enrolled in childcare is more than halved. This reduction is highest in Belgium, France, Hungary, Iceland and Sweden.<BR>L’aide publique aux familles ayant des enfants en âge préscolaire peut prendre la forme de prestations monétaires (allocations familiales, par exemple) ou en «nature» (par exemple les services de garde tels que les jardins d'enfants). La combinaison de ces mesures de soutien varie considérablement selon les pays de l'OCDE, d’une composition monétaire / ou en « nature » allant de 10%/90% à 80%/20%. Ce document attribue la valeur des services à un revenu « élargi » des ménages et compare les facteurs distributifs résultant et l’effet redistributif de ces deux volets de la politique familiale. En moyenne, les transferts monétaires et en nature constituent chacun 7- 8% des revenus des familles ayant des enfants en bas âge. Les deux instruments sont redistributifs. Les transferts monétaires réduisent la pauvreté infantile d'un tiers, et les effets estimés sont en-dessus de la moyenne en Autriche, Irlande, Suède, Hongrie et en Finlande. Lorsque les services sont pris en compte, la pauvreté infantile chute d'un quart et la pauvreté chez les enfants inscrits dans les services de garde est divisée par deux. Cette réduction est la plus élevée en Belgique, en France, en Hongrie, en Islande et en Suède.
    Keywords: income distribution, family policy, child poverty, cash and in-kind transfers
    JEL: D31 H40 I38 J13
    Date: 2012–09–11
  12. By: Christian N. Brinch, Magne Mogstad and Matthew Wiswall (Statistics Norway)
    Abstract: The interpretation of instrumental variables (IV) estimates as local average treatment effects (LATE) of instrument-induced shifts in treatment raises concerns about their external validity and policy relevance. We examine how to move beyond LATE in situations where the instrument is discrete, as it often is in applied research. Discrete instruments do not give sufficient support to identify the full range of marginal treatment effects (MTE) in the usual local instrumental variable approach. We show how an alternative estimation approach allows identification of richer specifications of the MTE when the instrument is discrete. One result is that the alternative approach identifies a linear MTE model even with a single binary instrument. Although restrictive, the linear MTE model nests the standard IV estimator: The model gives the exact same estimate of LATE while at the same time providing a simple test for its external validity and a linear extrapolation. Another result is that the alternative approach allows identification of a general MTE model under the auxiliary assumption of additive separability between observed and unobserved heterogeneity in treatment effects. We apply these identification results to empirically assess the interaction between the quantity and quality of children. Motivated by the seminal quantity-quality model of fertility, a large and growing body of empirical research has used binary instruments to estimate LATEs of family size on child outcomes. We show that the effects of family size are both more varied and more extensive than what the LATEs suggest. Our MTE estimates reveal that the family size effects vary in magnitude and even sign, and that families act as if they possess some knowledge of the idiosyncratic effects in the fertility decision.
    Keywords: Local average treatment effects; marginal treatment effects; discrete instrument; quantity-quality; fertility
    JEL: C26 J13
    Date: 2012–09
  13. By: D. Del Boca; C. Monfardini; C. Nicoletti
    Abstract: While a large literature has focused on the impact of parental investments on child cognitive development, very little is known about the role of child's own investments. Information on how children invest their time separately from parents is probably little informative for babies and toddlers, but it becomes more and more important in later stages of life, such as adolescence, when children start to take decisions independently. By using the Child Development Supplement of the PSID (Panel Study of Income Dynamics), we model the production of cognitive ability of adolescents and extend the set of inputs to include the child's own time investments. Looking at investments during adolescence, we find that child's investments matter more than mother's investments. On the contrary, looking at investments during childhood, it is the mother's investments that are more important. Our results are obtained accounting for potential unobserved child's and family's endowments and are robust across several specifications and samples, e.g. considering and not considering father's investments and non-intact families.
    JEL: J13 D1
    Date: 2012–09
  14. By: Dimitrios Christelis (CSEF and CFS); Loreti I. Dobrescu (University of New South Wales)
    Abstract: Using micro data from eleven European countries, we investigate the impact of being socially active on cognition in older age. Cognitive abilities are measured through scores on numeracy, fluency and recall tests. We address the endogeneity of social activities through panel data and instrumental variable methods. We find that social activities have an important positive effect on cognition, with the results varying by gender. Fluency is positively affected only in females, while numeracy only in males. Finally, recall is affected in both sexes. We also show that social activities, through their effect on cognition, influence positively households’ economic welfare.
    Keywords: Social Activities, Ageing, SHARE, Panel Data
    JEL: I10 J14 C23
    Date: 2012–09–05
  15. By: Jason Collins (Business School, University of Western Australia); Boris Baer (Centre for Integrative Bee Research (CIBER) ARC CoE in Plant Energy Biology, University of Western Australia); Ernst Juerg Weber (Business School, University of Western Australia)
    Abstract: The evolution by sexual selection of the male propensity to engage in conspicuous consumption contributed to the emergence of modern rates of economic growth. We develop a model in which males engage in conspicuous consumption to send an honest signal of their quality to females. Males who engage in conspicuous consumption have higher reproductive success than those who do not, as females respond to the costly and honest signal, increasing the prevalence of signalling males in the population over time. As males fund conspicuous consumption through participation in the labour force, the increase in the prevalence of signalling males who engage in conspicuous consumption gives rise to an increase in economic activity that leads to economic growth.
    Date: 2012
  16. By: Judith A. Clarke (Department of Economics, University of Victoria); Nilanjana Roy (Department of Economics, University of Victoria); Weichun Chen
    Abstract: The world has experienced impressive improvements in wealth and health, with, for instance, the world’s real GDP per capita having increased by 180% from 1970 to 2007 accompanied by a 50% decline in infant mortality rate. Healthier and wealthier. Are health gains arising from wealth growth? Or, has a healthier population enabled substantial growth in wealth? The answers to these questions have serious policy implications. We contribute to understanding dynamic links between wealth and health by analyzing the relationship between health (as measured by infant mortality rate) and wealth (as measured by GDP per capita) for a panel of 58 developing countries using quinquennial data covering the period 1960 through 2005. We examine for causal rather than associative links between these fundamental macro measures of economic development. The panel enables us to examine for causal links using several methods that differ in how cross-country and temporal heterogeneity is imposed: cross-country homogeneity with temporal heterogeneity and cross-country heterogeneity with temporal homogeneity. Under the latter case, we consider sensitivity to assuming fixed versus random causal coefficients. In addition, we explore robustness of outcomes to level of economic development (as measured by national income) and inclusion of another covariate (education).
    Keywords: infant mortality; per capita GDP; Granger causality; fixed and random causal coefficients
    JEL: O11 I15 C33
    Date: 2012–09–12
  17. By: Mwangi wa Githinji (University of Massachusetts Amherst)
    Abstract: A large literature on African economies argues that ethnicity plays a role in the politics and economics of African countries. Unfortunately, much of this literature is speculative or anecdotal because of the lack of data, with the exception of a few papers that examine ethnic networking as a business or employment strategy. In many ways Africa’s failure to develop is a failure of nationhood. Creating nation is handicapped by the use of ethnicity. In this paper, I empirically examine the relationship between employment, wages and ethnicity in Africa via a case study of Kenya. I challenge the pervasive view that ethnicity in Africa is related to a primordial instinct and attempt to show empirically that ethnicity is used by politicians as a political strategy to maintain power. In the process of using ethnicity, class solidarity is explicitly down played by politicians as ethnicity is reified. In this paper I specifically examine whether jobs are being used by politicians as both reward and carrot to ensure ethnic allegiances. This is done by testing whether being a member of a dominant group (in terms of population and also politically) has an impact on the possibility of employment and the level of wages. I do this using data from the 1986 Labour Force Survey which due to timing, uniquely allows me to connect ethnicity and income. I group the observation into 5 groups that are ranked based on kind of employment and wage. Of the five sectors the two desirable sectors are Self-employed above median income and Full time employment above median income. I test whether ethnicity has an impact of one being employed in these sectors. By inter-acting the dummy variable for dominant group in population and the ethnic dummy, I am able to separate out what may be returns just due to ethnic networking that comes from common culture, language etc and returns which are due in some sense to being from a politically dominant ethnicity. I am also able to test for the impact in a change in the ethnicity of the president (a further test of ethnic dominance) by using a difference in difference approach. I find that being in a politically dominant group improves one’s chances of obtaining a full time above median wage job. In fact this improvement in chances was highly correlated with political power and a change of ethnicity of the president resulted in a decrease in the probabilities of the past presidents “kinsfolk” being in desired sectors. Being a member of a locally dominant group in terms of population as compared to a politically dominant national group has no effect on likelihood of employment in one of the premium categories. My findings support the view that in a highly centralized state ethnicity can be reproduced via preferential employment to members of an in-group thus diminishing class solidarity that one may expect to occur between workmates. JEL Categories: Z13 N37, O15, P16.
    Keywords: Social Stratification, Discrimination, ethnicity, Kenya, inequality, class, employment.
    Date: 2012–09
  18. By: Geiler, P.H.M. (Tilburg University)
    Abstract: Chapter 4 examines the existence of the gender pay gap among top managers in the UK. The study suggests the existence of substantial differences in both the level and mix of executive remuneration between male and female executives, but fails to establish a gender pay gap at the CEO level. The fourth chapter also shows that the pay-for-performance sensitivity of female CEOs is higher than that of male CEOs.
    Date: 2012
  19. By: Albrecht Glitz (Universitat Pompeu Fabra and Barcelona GSE)
    Abstract: This paper provides a comprehensive description of the nature and extent of ethnic segregation in Germany. Using matched employer-employee data for the universe of German workers over the period 1975 to 2008, I show that there is substantial ethnic segregation across both workplaces and residential locations and that the extent of segregation has been relatively stable over the last 30 years. Workplace segregation is particularly pronounced in agriculture and mining, construction, and the service sector, and among low-educated workers. Ethnic minority workers are segregated not only from native workers but also from workers of other ethnic groups, but less so if they share a common language. From a dynamic perspective, for given cohorts of workers, the results show a clear pattern of assimilation, reminiscent of typical earnings assimilation profiles, with immigrants being increasingly less likely to work in segregated workplaces with time spent in the host country.
    Keywords: Ethnic Minorities, Residential Segregation, Workplace Segregation.
    JEL: J61 J63 J31
    Date: 2012–09
  20. By: Petar Jevtic; Elisa Luciano; Elena Vigna
    Abstract: We consider the problem of nding a suitable cohort-based model to capture the characteristics of a mortality surface with a parsimonious, continuous-time factor model. The model allows for imperfect correlation of mortality intensity across generations. It is implemented on UK data for the period 1900-2008. Calibration by means of stochastic search and the Differ- ential Evolution optimization algorithm proves to be outstanding and to yield robust and stable parameters. Both in-sample and out-of-sample, determin- istic as well as stochastic forecasts are examined. Calibration confirms that correlation across generations is smaller than one.
    Keywords: stochastic mortality, age effect, cohort effect, differential evolution algorithm, mortality forecasting.
    JEL: C1 C13 C38 C53 J11
    Date: 2012
  21. By: Naqvi, Nadeem
    Abstract: Diverse identities, some socially shared, arise from a person’s affiliation with multiple overlapping communities, which are non-disjoint subsets of persons in society. I prove that identification of each individual with binary preferences or their utility function representation, commonplace in economic theory, implies the impossibility of social-identity diversification of persons. Therefore, if the goal is to explain injustices based on social identity distinctions such as racial discrimination, the conceptual reach of economic theory needs extension. I propose a generalization by assigning non-binary preferences to each individual player to achieve endogenous social diversification, to potentially serve as a basis for explaining discrimination.
    Keywords: justice; social identity; discrimination; race; gender; non-binariness; maximization
    JEL: D46 D63 J15 J16
    Date: 2012–09–15
  22. By: Gil S. Epstein (Bar-Ilan University, IZA and CReAM)
    Abstract: A model is set up where migrants must choose a level of social traits and consumption of ethnic goods. As the consumption level of ethnic goods increases, the migrants become ever more different to the local population and are less assimilated. Less assimilation affects the reaction of the local population to the migrants and their willingness to accept the newcomers. This social phenomenon and affects wages and unemployment. We show that the growth in the unemployment and social benefits of legal migrants increases the consumption of ethnic goods, thus creating a trap wherein the willingness of the local population to accept the migrants into the economy decreases. This process also increases the probability of the migrants' dependence on the welfare state. On the other hand, illegal migrants could play an important role in the assimilation of the legal migrants.
    Keywords: Welfare state, Social benefits, Ethnic goods, Social trait, Assimilation, Unemployment.
    JEL: F22 O15 D6
    Date: 2012–09
  23. By: Leon Bettendorf; Egbert Jongen; Paul Muller (University Amsterdam/Tinbergen)
    Abstract: <p>Over the period 2005-2009 the Dutch government increased childcare subsidies substantially, reducing the average effective parental fee by 50%, and extended subsidies to so-called guestparent care. We estimate the labour supply effect of this reform with a difference-in-differences strategy, using parents with older children as a control group.</p><p>We find that the reform had a moderately sized impact on labour supply. Furthermore, the effects are an upper bound since there was also an increase in an earned income tax credit for the same treatment group over the same period. The joint reform increased the maternal employment rate by 2.3%-points (3.0%). Average hours worked by mothers increased by 1.1 hours per week (6.2%). Decomposing the hours effect we find that most of the increase in hours is due to the intensive margin response. A number of robustness checks confirm our results.</p><p> </p>
    JEL: C21 H40 J13 J22
    Date: 2012–09
  24. By: Fedotenkov, I. (Tilburg University)
    Abstract: The main conclusions of the thesis are that pension reform can be welfare improving if losses and benefits are redistributed by the central government. The possibility of welfare improving social security reform comes from a more efficient use of an immobile production factor, such as land. Furthermore, the reforming country has incentives not to announce the pension reform in advance; however, such an announcement would be appreciated by its neighbours. Population ageing may lead to an inflow or outflow of capital from the ageing country depending on the degree of substitutability between domestic and foreign. Because of differences in pension systems, population ageing may lead countries to specialze in labour intensive goods, which is contrary to what many previous studies have found.
    Date: 2012
  25. By: Alfonso Miranda; Yu Zhu
    Abstract: We focus on the effect of English deficiency on the native-immigrant wage gap for employees in the UK using the first wave of the UK Household Longitudinal Survey (Understanding Society). We show that the wage gap is robust to controls for age, region of residence, educational attainment and ethnicity, particularly for men. However, English as Additional Language (EAL) is capable of explaining virtually all the remaining wage gap between natives and immigrants. Using the interaction of language of country of birth and age-at-arrival as instrument, we find strong evidence of a causal effect of EAL on the native-immigrant wage gap.
    Keywords: native-immigrant wage gap; English as Additional Language (EAL); age-at-arrival
    JEL: J15 J61
    Date: 2012–09
  26. By: Madeeha Gohar Qureshi (Pakistan Institute of Development Economics, Islamabad.); Eatzaz Ahmed (Quaid-i-Azam University, Islamabad)
    Abstract: The empirical growth literature gives no clear indication as to how democracy impacts growth; there is evidence of both positive and negative effects and also of no direct link in democracy and growth nexus. In this study an attempt has been made to resolve this controversy by putting this question in a dynamic simultaneous equation framework that combines in a system the regression in differences with regression in levels applied on a cross county data set over the period 1987-2002. This type of modelling not only controls for the endogeneity of the explanatory variables and the unobserved country-specific effects but also allows us to analyse the impact of democracy on per capita GDP growth and the reverse causation from per capita GDP growth on political and civil freedom simultaneously. Our result shows evidence in support of a quadratic impact of the democracy on per capita GDP growth (an inverted U relationship) that is per capita GDP is found to be increasing in democracies at low levels but after a certain moderate level of democracy this relation turns negative. The support of reverse causation from per capita GDP growth to political and civil freedom is found only in countries grouped as partially free and free democracies. However we do not find any evidence in support of Lipset Hypothesis that prosperity leads to increase in propensity to experience political freedom taking all countries into consideration.
    Keywords: Democracy, Per Capita GDP Growth, Quadratic Relationship, Lipset Hypothesis
    JEL: C22 O43
    Date: 2012
  27. By: Nicholas Rees; Jingqing Chai; David Anthony (Division of Policy and Practice,UNICEF)
    Abstract: At the most fundamental level, providing adequate investments that enable children to thrive is a moral imperative, and investing in a child is to invest in society’s future. Most would agree that there could be no more compelling argument than that. The international community has recognized that investing in children is not only essential, but an obligation as outlined under the United Nations Convention on the Rights of the Child (CRC). Still, other arguments related to economic and social issues have also been made in search of an answer to the broad question: To what extent do investments in children’s survival and well-being also contribute to poverty reduction, income equality and economic growth? This paper provides a review of the literature on these relationships. It finds that investing in children can be extremely effective, and that the social and economic returns are potentially very large. Some of the evidence is based on investments that target the poorest and most vulnerable children and families. The paper also notes, however, that there are still considerable gaps in the literature, and that more needs to be done to effectively analyse the returns and the impact of investments within different contexts and environments.
    Keywords: public expenditures, public investment, economic growth, equity, poverty reduction, early childhood development, health, education, social protection, children’s rights
    JEL: D61 H22 H51 H52 I15 I21 O21 O22
    Date: 2012
  28. By: Pablo Antolin; Stéphanie Payet; Juan Yermo
    Abstract: To adapt pension systems to demographic trends, many countries are reducing pay-as-you-go public pension levels and lifting retirement ages. In this context, funded pensions could play a major role to avoid adequacy gaps. Yet, as this paper shows, the coverage of funded private pensions, as measured by enrolment rates, is highly uneven across countries and between individuals, especially in voluntary systems. Some countries have made funded pensions compulsory (e.g. Australia, Chile) or quasimandatory (e.g. Denmark, the Netherlands) to ensure that most workers are covered and therefore have access to a sufficiently high complementary pension. However, in other countries with relatively low pay-as-you-go public pension benefits, funded private provision remains voluntary. The low level of funded pensions’ coverage in such countries should be a major policy concern. Recent policy initiatives in Germany and New Zealand, involving the introduction of financial incentives (and auto enrolment in New Zealand) have been effective in raising coverage to the highest levels among voluntary pension arrangements, but coverage gaps remain that need to be addressed.<P>Couverture des systèmes de pensions privées : preuve et options politiques<BR>Pour adapter les systèmes de retraite aux tendances démographiques, de nombreux pays réduisent les niveaux des retraites publiques par répartition et relèvent les âges de départ à la retraite. Dans ce contexte, les retraites par capitalisation pourraient jouer un rôle majeur pour éviter des écarts d’adéquation. Toutefois, comme le montre ce document, la couverture des pensions privées par capitalisation, telle que mesurée par les taux d’adhésion, est fortement inégale entre les pays et entre les individus, en particulier dans les systèmes volontaires. Certains pays ont rendu les pensions par capitalisation obligatoires (par ex. l’Australie, le Chile)ou quasi-obligatoires (par ex. le Danemark, les Pays-Bas) pour s’assurer que la plupart des travailleurs sont couverts et ont ainsi accès à une retraite complémentaire suffisamment élevée. En revanche, dans d’autres pays, où les prestations des retraites publiques par répartition sont relativement faibles, l’offre privée par capitalisation reste volontaire. La faible couverture des pensions par capitalisation dans ces pays devrait être un souci politique majeur. De récentes initiatives politiques en Allemagne et en Nouvelle-Zélande, impliquant l’introduction d’incitations financières (et l’adhésion automatique en Nouvelle-Zélande), ont été efficace à augmenter la couverture parmi les plus hauts niveaux au sein des dispositifs de retraites volontaires, mais des écarts de couverture demeurent et doivent être abordés.
    Keywords: coverage, compulsion, funded pensions, auto-enrolment, financial incentives, benefit adequacy, Couverture, retraite par capitalisation, coercition, adhésion automatique, incitations financières, adéquation des prestations
    JEL: G23 J26 J32
    Date: 2012–06
  29. By: Bell, David; Rutherford, Alasdair
    Abstract: This paper examines the combined effects of population ageing and changes in long-term care policy on the housing market. Those needing care prefer to receive it at home rather than in institutional settings. Public authorities prefer to provide care in residential settings which are generally lower cost than institutional care. The trend away from institutional provision towards care at home is endorsed by national governments and by the OECD. Nevertheless, as the number requiring care increases, this policy shift will maintain the level of housing demand above what it would otherwise be. It will also have distributional consequences with individuals less likely to reduce their housing equity to pay for institutional care, which in turn will increase the value of their bequests. Empirical analysis using the UK Family Resources Survey and the British Household Panel Survey shows that household formation effects involving those requiring long-term care are relatively weak and unlikely to significantly offset the effects of this policy shift on the housing market and on the distribution of wealth.
    Keywords: Ageing; Demographic change; Housing market; Long-term care
    Date: 2012–06
  30. By: Messe, Pierre-Jean; Rouland, Bénédicte
    Abstract: From French data, this paper uses a difference-in-differences approach combined with propensity score matching to identify the effect of an exogenous change in employment protection among older workers on firm’s incentives to sponsor training. Laying off workers aged 50 and above, French firms have to pay a tax to the unemployment insurance system, known as the Delalande tax. In 1999, the measure was subjected to a reform that increased due taxes but that did not concern equally all firms. We find that this exogenous shock to employment protection for older workers substantially rises firms’ incentives to train the 45-49 age group of workers. This result confirms predictions of the simple labor market model we develop in a first stage.
    Keywords: older workers; employment protection; firms’ training incentives
    JEL: J14 J24 J26
    Date: 2012–09
  31. By: Bruno Chiarini; Paolo Piselli (-)
    Abstract: Using the theoretical framework based on the monopoly union model described in Kidd and Oswald (1987) and Jones (1987), this paper provides an explicit framework to assess the role of wage moderation in Italy in the last twenty years. There are two crucial ingredients to the model: the composition of union membership and the pension system. We show that the increase in pensioners' membership in the presence of a pay-as-you-go (PAYG) pension scheme has led unions to moderate wage claims. However, this result is reversed when we shift from a PAYG system to a fully-funded (FF) regime (recently adopted in Italy): in this case, the model predicts a rise in wages with respect to the standard model, regardless of the share of pensioners in the membership.
    Keywords: Union membership, Pensioners, Wage-pension trade-off
    JEL: J11 J51
    Date: 2012–09–10

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