nep-dem New Economics Papers
on Demographic Economics
Issue of 2021‒07‒12
seven papers chosen by
Héctor Pifarré i Arolas
Universitat Pompeu Fabra

  1. Pension Incentives and Labor Supply: Evidence from the Introduction of Universal Old-Age Assistance in the UK By Giesecke, Matthias; Jaeger, Philipp
  2. Motherhood and the Allocation of Talent By Berniell, Maria Ines; Berniell, Lucila; De la Mata, Dolores; Edo, María; Fawaz, Yarine; Machado, Matilde P.; Marchionni, Mariana
  3. Does Paid Family Leave Save Infant Lives? Evidence from United States By Chen, Feng
  4. An assessment on the potential impact of COVID-19 on the Italian demographic structure By Giacomo Caracciolo; Salvatore Lo Bello; Dario Pellegrino
  5. Status Externalities and Low Birth Rates in Korea By Seongeun Kim; Michèle Tertilt; Minchul Yum
  6. Counting the Missing Poor in Pre-Industrial Societies By Lefebvre, Mathieu; Pestieau, Pierre; Ponthiere, Gregory
  7. The Dynastic Benefits of Early Childhood Education By Jorge Luis Garcia; Frederik Bennhoff; Duncan Ermini Leaf; James J. Heckman

  1. By: Giesecke, Matthias (RWI); Jaeger, Philipp (RWI)
    Abstract: We study the labor supply implications of the Old-Age Pension Act (OPA) of 1908, which, for the first time, provided pensions to older people in the UK. Using recently released census data covering the entire population, we exploit variation at the newly created age-based eligibility threshold. Our results show a considerable and abrupt decline in labor force participation of 6.0 percentage points (13%) when older workers reach the eligibility age of 70. To mitigate the impact of population aging today, pension reforms aimed at increasing elderly labor supply, however, have to induce much larger behavioral responses than the OPA.
    Keywords: old-age assistance, labor supply, retirement, regression discontinuity design, equity-efficiency trade-off
    JEL: D61 H21 H55 J14 J22 J26
    Date: 2021–06
  2. By: Berniell, Maria Ines (University of La Plata); Berniell, Lucila (Development Bank of Latin America); De la Mata, Dolores (Development Bank of Latin America); Edo, María (Universidad de San Andrés); Fawaz, Yarine (CEMFI, Madrid); Machado, Matilde P. (Universidad Carlos III de Madrid); Marchionni, Mariana (Universidad Nacional de la Plata)
    Abstract: In this paper we show that motherhood triggers changes in the allocation of talent in the labor market besides the well-known effects on gender gaps in employment and earnings. We use an event study approach with retrospective data for 29 countries drawn from SHARE to assess the labor market responses to motherhood across groups with different educational attainment, math ability by the age of 10, and personality traits. We find that while even the most talented women— both in absolute terms and relative to their husbands—leave the labor market or uptake part-time jobs after the birth of the first child, all men, including the least talented, stay employed. We also find that motherhood induces a negative selection of talents into self-employment. Overall, our results suggest relevant changes in the allocation of talent caused by gender differences in nonmarket responsibilities that can have sizable impacts on aggregate market productivity. We also show that the size of labor market responses to motherhood are larger in societies with more conservative social-norms or with weaker policies regarding work-life balance.
    Keywords: child penalty, part-time, self-employment, motherhood, allocation of Talent
    JEL: J13 J16 J22 J24
    Date: 2021–06
  3. By: Chen, Feng
    Abstract: One goal of the paid family leave (PFL) is to help working mothers balance their careers and family responsibilities and hence improve the well-being of their infants. However, most studies of PFL on early childhood outcomes have been based on the analyses of surviving infants. If PFL reduces infant deaths, such analyses would understate the effects. Using the linked birth and infant death data in the U.S. with a difference-in-differences framework, I find that the implementation of a six-week PFL in California reduced the post-neonatal mortality rate by 0.135, or it saved approximately 339 infant lives. The effects were driven by death from internal causes, and there were larger effects for infants with married mothers and infant boys. Additional robustness checks and placebo examinations indicate that the effect is not due to confounding factors or contemporary shocks but causal.
    Keywords: paid family leave,infant mortality,child development
    JEL: J13 J16 J18
    Date: 2021
  4. By: Giacomo Caracciolo (Bank of Italy); Salvatore Lo Bello (Bank of Italy); Dario Pellegrino (Bank of Italy)
    Abstract: Relative to past pandemics, the mortality effects of Covid-19 on the demographic structure are likely smaller. However, the behavioural effects of the economic crisis on the decisions to have children and to migrate may be substantial. The literature on the relationship between the economic cycle and demographics uncovers the potential of the unemployment rate to predict fertility and migrations. Based on this evidence, we estimate the elasticity of the number of births per woman of child-bearing age and of the net migration rate to the unemployment rate in Italy, considering the 1980-2019 period. Accordingly, we forecast the impact of the pandemic on the birth rate and on migration flows in 2020-23, and we build alternative scenarios for the following years (2024-2065). Lastly, we examine the consequences of the same phenomena on the demographic structure and on GDP and on GDP per capita. Given the scenarios outlined in our work and in the absence of effective policies to support economic growth, the crisis may exacerbate the process of population ageing indicated by Istat projections, with significant repercussions for output.
    Keywords: demographic trends, macroeconomic effects, and forecasts, fertility, family planning, economic history (demography, comparative), population ageing.
    JEL: J11 J13 N30
    Date: 2021–06
  5. By: Seongeun Kim; Michèle Tertilt; Minchul Yum
    Abstract: East Asians, especially South Koreans, appear to be preoccupied with their offspring’s education—most children spend time in expensive private institutes and in cram schools in the evenings and on weekends. At the same time, South Korea currently has the lowest total fertility rate in the world. In this paper, we propose a theory with status externalities and endogenous fertility that connects these two facts. Using a quantitative heterogeneous-agent model calibrated to Korea, we find that fertility would be 16% higher in the absence of the status externality. Furthermore, childlessness in the poorest quintile would fall from five to less than one percent. We then explore the effects of various government policies. A pro-natal transfer increases fertility and reduces education while an education tax reduces both education and fertility, with heterogeneous effects across the income distribution. The policy mix that maximizes the current generation’s welfare consists of an education tax of 12% and moderate pro-natal transfers—a monthly child allowance of 3% of average income for 18 years. This would raise average fertility by about 5% and decrease education spending by 16%. Although this policy increases the welfare of the current generation, it may not do the same for future generations as it lowers their human capital.
    Keywords: Fertility, Status, Externality, Education, Childlessness, Korea
    JEL: D13 E24 I2 J10 J13 D62 O40
    Date: 2021–06
  6. By: Lefebvre, Mathieu; Pestieau, Pierre (Université catholique de Louvain, LIDAM/CORE, Belgium); Ponthiere, Gregory (Université catholique de Louvain)
    Abstract: Under income-differentiated mortality, poverty measures suffer from a selection bias: they do not count the missing poor (i.e. persons who would have been counted as poor provided they did not die prematurely). The Pre-Industrial period being characterized by an evolutionary advantage (i.e. a higher number of surviving children per household) of the non-poor over the poor, one may expect that the missing poor bias is substantial during that period. This paper aims at estimating the missing poor bias in Pre-Industrial societies, by computing the hypothetical headcount poverty rates that would have prevailed provided the non-poor did not benefit from an evolutionary advantage over the poor. Using data on Pre-Industrial England, we show that the sign and size of the missing poor bias is sensitive to the degree of downward mobility for the non-poor.
    Keywords: poverty, measurement, selection effects, missing poor
    JEL: I32
    Date: 2021–06–16
  7. By: Jorge Luis Garcia (Clemson University); Frederik Bennhoff (The University of Chicago); Duncan Ermini Leaf (University of Southern California); James J. Heckman (The University of Chicago)
    Abstract: This paper monetizes the life-cycle intragenerational and intergenerational benefits of the Perry Preschool Project, a pioneering high-quality early childhood education program implemented before Head Start that targeted disadvantaged African-Americans and was evaluated by a randomized trial. It has the longest follow-up of any experimentally evaluated early childhood education program. We follow participants into late midlife as well as their children into adulthood. Impacts on the original participants and their children generate substantial benefits. Access to life-cycle data enables us to evaluate the accuracy of widely used schemes to forecast life-cycle benefits from early-life test scores, which we find wanting.
    Keywords: cost-benefit analysis, dynastic benefits, early childhood education, intergenerational program evaluation, life-cycle benefits
    JEL: J13 I28 C93 H43
    Date: 2021–06

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