Showing papers in "The journal of the economics of ageing in 2015"

Production activities and economic dependency by age and gender in Europe: A cross-country comparison

Abstract: We compare selected European countries using an economic dependency ratio which emphasizes the role of age-specific levels of production and consumption. Our analysis reveals large differences in the age- and gender-specific level and type of production activities across selected European countries and identifies possible strategies to adjust age-specific economic behaviour to an ageing population. The cross-country differences in economic dependency of children and elderly persons are largely determined by the age at which people enter, respectively exit, the labour market. The ability of the working age population to support children and elderly persons in turn is strongly influenced by the participation of women in paid work. We also provide a measure for the age-specific production and consumption in form of unpaid household work. The inclusion of unpaid household work leads to a decrease of the gender differences in production activities and indicates that the working age population supports children and elderly persons not only through monetary transfers but also through services produced by unpaid work (e.g. childcare, cooking, cleaning…). Given the available data, we cannot distinguish the age profile of consumption by gender and have to assume – in case of unpaid work - that each member of the household consumes the same. Hence, our results have to be regarded as a first approximation only. Our paper aims to argue that a reform of the welfare system needs to take into account not only public transfers but also private transfers, in particular the transfers in form of goods and services produced through unpaid household work.

Aging, social security design, and capital accumulation

Abstract: This paper analyzes the impact of aging on capital accumulation and welfare in a country with a sizable unfunded social security system. Using a two-period overlapping generation model with endogenous retirement decisions, the paper shows that the type of aging and the type of unfunded social security system are important in understanding this impact. The analysis compares two types of demographic changes, declining fertility and increasing longevity; three types of pensions, defined contributions, defined benefits, and defined annuities; as well as mandatory and optimal retirement systems to investigate the differences in implications of aging.

Post-retirement labour supply in England

Abstract: This paper uses data from the English Longitudinal Study of Ageing to investigate the determinants of post retirement labour supply behaviour amongst retired men in England. I find the hazard of unretirement is highest when an individual is in their mid-late 60s. Evidence suggests unretirement is more likely amongst individuals with a higher level of educational attainment, who have a spouse in the labour market and are in better health. I investigate the nature of unretirement jobs and find they tend to be part time and provide a non-trivial source of income.

Frailty, mortality, and the demand for medical care

Abstract: This paper proposes a theory of aging and longevity according to which the probability to survive at any age depends on the number of health deficits accumulated, as suggested by modern biology. I calibrate the model for a reference U.S. citizen and exploit the fact that the association between health deficits and mortality has been estimated with great precision in gerontology. This allows me to use the model for quantitative experiments. I compare health expenditure, health deficits, and the value of life for richer and poorer individuals. The model motivates a strong socioeconomic gradient of health. It explains how income growth and advances in medical technology and the induced increase in health care demand led to large reductions in health deficits and roughly a doubling of the value of life at all ages.

The age-profile of invisible transfers: the true size of asymmetry in inter-age reallocations

Abstract: We argue that the institutional composition of funding consumption in the two dependent sections of the lifecycle, childhood and old age, are different. To put it sharply, children are raised by their parents, the elderly rely on society. Since the reallocation of resources within and between households are not registered in National Accounts, the majority of the resources transferred to children are not visible in contrast to resources flowing to the elderly, which are almost entirely observed in public statistics. For our analysis we apply a recent extension of National Accounts, called the National Transfer Accounts, which include private transfers; and a further, experimental extension, the National Time Transfer Accounts, which quantifies the value of time transferred among household members in the form of unpaid household labor. We show that less than one third of the full transfer package flowing to children is registered in the National Accounts and another roughly one third is made visible by the National Transfer Accounts. The remaining one third, which is the value of parents caring for their children, is made visible by the National Time Transfer Accounts. The corresponding shares in funding old age are quite different: 90 percent is observed in public statistics and the two accounting extensions unfold only a bit less than 10 percent.

Do social networks improve Chinese adults’ subjective well-being?

Abstract: This paper studies relationships between social networks, health and subjective well-being (SWB) using nationally representative data of the Chinese Population-the Chinese Family Panel Studies (CFPS). Our data contain SWB indicators in two widely used variants-happiness and life-satisfaction. Social network variables used include kinship relationships measured by marital status, family size, and having a genealogy; ties with friends/relatives/neighbors measured by holiday visitation, frequency of contacts, and whether and value gifts given and received; total number and time spent in social activities, and engagement in organizations including the communist party, religious groups, and other types. We find that giving and receiving gifts has a larger impact on SWB than either just giving or receiving them. Similarly the number of friends is more important than number of relatives, and marriage is associated with higher levels of SWB. Time spent in social activities and varieties of activities both matter for SWB but varieties matter more. Participation in organizations is associated with higher SWB across such diverse groups as being a member of the communist party or a religious organization. China represents an interesting test since it is simultaneously a traditional society with long-established norms about appropriate social networks and a rapidly changing society due to substantial economic and demographic changes. We find that it is better to both give and receive, to engage in more types of social activities, and that participation in groups all improve well-being of Chinese people.

Can public spending reduce mortality disparities? Findings from East Germany after reunification

Abstract: Following the reunification of Germany, eastern Germans experienced large increases in life expectancy. The introduction of the West German welfare system was accompanied by mortality reductions, particularly for older East Germans. We use this natural experiment to investigate to what extent increased public social security transfers contributed to the rise in life expectancy. We find that every euro invested in East German pensions and health care yielded on average three hours of additional life expectancy. The rise in public spending was particularly beneficial for older age groups. Investments in health care were more beneficial for reducing all-cause mortality in the East. Still, investments in pensions were important for closing the life expectancy gap to West Germany. Our results suggest that public policy measures geared toward equalizing living standards can also help to narrow mortality differentials.

Bonus or mirage? South Africa’s demographic dividend

Abstract: South Africa is in the process of undergoing a demographic transition and the population is currently ageing. Within the next three decades, the median age is expected to rise from 25 years to 31 years. As part of this process, the changing age structure of the population gives rise to the demographic dividend. This dividend represents a potential boost to per capita incomes that countries can only access in the presence of a supportive policy context. However, South Africa is still dealing with the consequences of apartheid-era socioeconomic policies and has already progressed through a significant proportion of the first demographic dividend period. Using the National Transfer Accounts approach and data for 2005, this paper investigates the extent of the remaining portion of the first demographic dividend and assesses the prospects for capturing the potentially more significant second dividend.

Labor market outcomes of informal care provision in Japan

Abstract: This paper examines the labor supply outcomes of family care provision for Japanese households in 2010, ten years after the introduction of the public long-term care insurance (LTCI) program. We found that family care provision for parents adversely affected labor market outcomes of main caregivers at home in terms of the probability of working, employment status and hours worked. The adverse effect was found to be more serious for female caregivers than for male caregivers. Moreover, our results suggest that the public LTCI program seems to only partially mitigate the disadvantages of the main caregivers for both males and females.

The Long Reach of Education: Early Retirement

Abstract: The goal of this paper is to draw attention to the long lasting effect of education on economic outcomes. We use the relationship between education and two routes to early retirement - the receipt of Social Security Disability Insurance (DI) and the early claiming of Social Security retirement benefits - to illustrate the long-lasting influence of education. We find that for both men and women with less than a high school degree the median DI participation rate is 6.6 times the participation rate for those with a college degree or more. Similarly, men and women with less than a high school education are over 25 percentage points more likely to claim Social Security benefits early than those with a college degree or more. We focus on four critical "pathways" through which education may indirectly influence early retirement - health, employment, earnings, and the accumulation of assets. We find that for women health is the dominant pathway through which education influences DI participation. For men, the health, earnings, and wealth pathways are of roughly equal magnitude. For both men and women the principal channel through which education influences early Social Security claiming decisions is the earnings pathway. We also consider the direct effect of education that does not operate through these pathways. The direct effect of education is much greater for early claiming of Social Security benefits than for DI participation, accounting for 72 percent of the effect of education for men and 67 percent for women. For women the direct effect of education on DI participation is not statistically significant, suggesting that the total effect may be through the four pathways.

Reallocation of resources between generations and genders in the market and non-market economy. The case of Italy.

Abstract: In this article the National Transfer Accounts (NTA) method is used to develop a comprehensive account of resource reallocations between population members in Italy, encompassing the age and the gender perspective, the public and the familial institutional sectors as well as the market and non-market dimensions of the economy. The inclusion of the non-market economy, referring to household and care time, allows for an insight into the gender division of labour and the strength of intergenerational obligations in the Italian familistic welfare regime. Results highlight the existence of large flows of resources within the family both between genders and toward young generations, with men and women giving rise to considerable monetary and time transfers, respectively.

Economic inequality and intergenerational transfers: Evidence from Mexico

Abstract: Recent evidence of the National Transfer Accounts (NTA) of Mexico reveals that asset-based reallocations play a significant role in the financing of the expenditures by elderly Mexicans, whereas private and public transfers are used to support most of the expenditures for children. What that evidence does not consider, however, is the fact that differences in socioeconomic status (SES) may seriously distort the reallocation of intergenerational flows. Mexico has long been a country permeated by high levels of inequality, it is then necessary to include its effects in the analysis of intergenerational transfers. Furthermore, age reallocations of economic flows do change over time and such changes might also involve greater economic inequality. In this paper, I assess the effects of SES inequality on the reallocation of intergenerational flows using NTA estimates for two particular years, 1994 and 2004. I show that the reallocation of economic resources, mainly to children and the elderly, by SES changed substantially within this period. The main intergenerational effects associated with SES inequality are: a) equalizing effects of labor income and remittances, b) higher progressivity of public cash and educational transfers, and c) crowding-out effects between private and public transfers among the elderly.

Baby Boomer caregivers in the workforce: Do they fare better or worse than their predecessors?

Abstract: Objective: Since the 1960’s there have been substantial increases in women’s labor force attachment. Meanwhile, a shifting focus to care in community settings has implied an increasingly important role for informal caregivers. In light of these changes and the unpaid leave policies introduced in the 1990s to reduce the caregiver-labor force participant role strain, it is important to assess whether the labor market outcomes of caregivers have changed over time. We explored the impact of caregiving on women’s labor force participation, hours of work, and wages and whether this effect was different for women in the Baby Boomer generation versus women born in the pre-World War II years. Methods: Using data from the American National Longitudinal Surveys of Young Women and Mature Women, we followed two cohorts of pre-retirement aged women at similar points in their careers. We used pooled and fixed effects regressions. Results: We found that intensive informal caregiving was negatively associated with labor force participation and hours of work for both pre-Baby Boomers and Baby Boomers. Further, the caregiving effects were not significantly different across cohorts. Caregiving was not significantly associated with wages after controlling for time-invariant unobserved heterogeneity. Discussion: This study provides a first step in establishing that caregiving labor market penalties have persisted over time, despite the introduction of offsetting policies.

The lifecycle deficit in France, 1979–2005

Abstract: We use the National Transfer Accounts methodology to calculate the lifecycle deficit in France for the years 1979–2005. During this period, consumption profiles were roughly constant over age, while labor income profiles shifted to higher ages. The share of the aggregate lifecycle deficit in GDP rose sharply in the 1980s due to an increase in the mean age of the population. In contrast, the per capita shares of the lifecycle deficit attributed to the population under 20 and over 60 varied little during this period, even though the relative weights of these two age-segments has shifted continuously in favor of the latter.

The employability of older job-seekers: Evidence from Germany

Abstract: Encouraged by the European Employment Strategy, the German government, like many other European governments, promotes individual employability as an instrument to improve the persistently low employment prospects of older job-seekers in the labour market. However, ageing is only rarely discussed in contemporary employability approaches. This article includes various employability approaches and empirically tests the commonly used dimensions of employability in actual labour market prospects with respect to older job-seekers (>50 years of age). Many dimensions of employability are found to vary by age, and older job-seekers can be described as disadvantaged with regard to certain dimensions. However, disadvantages in “classical” employability factors cannot fully explain the comparatively poor labour market prospects of older job-seekers. This article shows that older job-seekers in Germany are less likely to transit from unemployment to employment, even after controlling for employability factors.

Who supports the elderly? The changing economic lifecycle reallocation in Taiwan, 1985 and 2005

Abstract: Ensuring the economic security of the elderly population in Taiwan has become a pressing policy concern because of rapid population aging and other large-scale socio-economic changes. It is therefore necessary to understand how the elderly have financed their later years. To study how old-age financing has evolved in Taiwan, we have adopted the National Transfer Accounts approach in order to estimate four major financing channels in 1985 and 2005. Our results show that public transfers and asset-based reallocations have gradually replaced family support and labor income. This suggests the need for individuals to save before retirement, and for the state to take a larger role in the caring for elderly in the future.

Analysis of non-remunerated production in Costa Rica

Abstract: Disaggregating national production by sex might lead to the misleading conclusion that women’s contribution to the economy is significantly lower than men’s. National Accounts fail to measure the time people dedicate to non-remunerated production because there is no explicit economic compensation. However, non-remunerated production contributes indirectly to the economy, and it represents part of the real cost of taking care of others. The opportunity cost of dedication to non-remunerated production depends highly on the educational level and personal preferences. This article estimates the real contribution of men and women to the Costa Rican economy by calculating labor income and non-remunerated production by age and sex. In addition, the article disaggregates the main activities of non-remunerated production by educational level.

Retirement decisions of couples in Australia: The impact of spousal characteristics and preferences

Abstract: This paper provides new evidence of coordination of retirement by mature age couples in Australia. Two complementary estimation approaches are used to highlight the importance of taking the household decision-making context into account when modeling the retirement behaviour of partnered men and women. First, a single risk hazard model provides insights into the influences of a spouse’s characteristics on the retirement decision of the individual. Second, a competing-risks framework is used to examine the retirement behaviour of couples exiting from a situation in which both are in paid employment. There is strong evidence of coordination of retirement by mature age couples in Australia due to complementarities in leisure and, for women, because of caring responsibilities. In particular, the results suggest that women may delay their own retirement if their partner has a financial incentive to continue in the labour force; or retire early to care for a partner who is in poor health.

The side effect of pension reforms on the training of older workers. Evidence from Italy

Abstract: Due to pension reforms, minimum retirement age in Italy increased substantially above age 50 between the second part of the 1990s and the early 2000s. We evaluate whether these reforms affected training participation by private sector employees aged 40–54, who entered their fifties during the relevant years. We find evidence of a sizeable effect: our estimates suggest a 9% increase in training incidence following a one-year increase in minimum retirement age. We also show that, while policies that increase the residual working horizon are effective in increasing training participation by senior workers in their forties and early fifties, traditional training policies that aim at reducing training costs by providing subsidies are ineffective.

Age-training gaps across the European Union: How and why they vary across member states

Abstract: In line with human capital theory, training rates decline with age but empirical evidence on the factors that mitigate against this is limited. This study addresses this gap by using Fairlie-Blinder-Oaxaca decompositions to disentangle the extent to which age-training gaps are due to directly age-related, coefficient effects and differences in observable characteristics. We analyse both workers and non-workers using data for 15 European Union countries from the European Union Labour Force Survey (2004–2010). The results show that direct age-related effects reflecting, for example, the preferences of older people and attitudes toward them are only part of the explanation for age-training gaps. For older workers significant mitigating factors are the combination of higher overall training rates and high rates of employment participation for older people. This combination of factors is found in the Nordic countries of Sweden and Denmark and in sectors that are predominately publicly owned. The longer tenure of older workers, particularly men, also works to narrow age-training gaps. In contrast, the lower educational base of older people adversely affects their training take-up. However the most significant factors that make it more likely that an older person will undertake training are having a job in the first place and being female.

Wellbeing over 50

Abstract: Drawing on the Senian capability approach to welfare economics and using panel data from the English Longitudinal Survey of Ageing (ELSA), this paper illustrates how the approach can be used to shed light on wellbeing in older age. Specifically, we estimate models of variables related to three aspects of a person’s wellbeing: daily activities, happiness and capabilities. Results indicate that the production of activities depends significantly inter alia on education, health and gender; that happiness is related to a wide variety of activities and that there are potentially significant gender inequalities in some of the constraints that older people face and which impinge upon their wellbeing. The paper concludes by suggesting that the capabilities approach is a workable tool for exploring the production and distribution of wellbeing in older age.

Can we keep the pre-crisis living standards? An analysis based on NTA profiles in Spain

Abstract: In the context of the deep economic crisis affecting most western countries, but specially Southern Europe, some voices have claimed that Spaniards had been living beyond their means. In this paper, we try to shed some light on this issue by using National Transfer Accounts (NTA). We estimate the NTA for 2008 and compare them with the obtained previously for 2000 (Patxot et al., 2011a), obtaining interesting conclusions. The aggregated lifecycle deficit – difference between consumption and labour income – has increased from 8.8% of GDP in 2000 to 10.1% in 2008. The aggregated LCD evolution is driven on the one hand by the change in per capita profiles and, on the other hand by the change in population age structure. Along the observed period, the effect of population has been quite positive, due to the effect of migration, so that the economic support ratio has increased. In absence of population changes, LCD would have increased 2 percentage more points in terms of GDP. Nevertheless, the positive effect of population age structure is ending and the opposite effect is expected for the next decades with the baby boom retirement. Hence, our conclusion is that the levels of labour income and consumption by age observed in 2008 are not sustainable in the coming decades.

Financing consumption over the lifecycle and overseas workers’ remittances: Findings from the 1999 and 2007 Philippine National Transfer Accounts

Abstract: This paper compares the patterns of consumption, labor income earned and financing of consumption at different ages or stages of the lifecycle of the average Filipino between the years 1999 and 2007 using the Philippine (NTA) for these years. The comparison shows some changes worth noting and these include the overall increase in per capita labor income and consumption in real terms, the rise in real per capita private health spending at older ages, and change in reliance on labor income as a source to finance consumption of the young and the elderly. Additionally, the implications of changing the definition or treatment of remittances of Overseas Filipino Workers (OFWs) in the estimation of the Philippine NTA are demonstrated and discussed. The 2007 NTA was estimated two ways: first with OFW remittances defined as mainly inter-household transfers; and, second, with OFW remittances defined as mainly labor income (earnings) in the revised estimates. The implications of the change in definition is examined by comparing the first and revised sets of 2007 NTA estimates, and it is noted that the definitional change results in a smaller lifecycle deficit or a smaller gap between consumption and labor income in the revised estimates, among others.

Smoking and cognitive functioning at older ages: Evidence from the Health and Retirement Study

Abstract: It has long been established that smoking has detrimental health effects on the human body and leads to early mortality. However, the evidence regarding the link between smoking behavior and cognitive function in old age is mixed. While nicotine has been shown to improve cognitive functioning in some medical studies, current smokers typically perform worse than non-smokers on cognitive tests in population based studies. We use the Health and Retirement Study to evaluate the role of unobserved factors in explaining these conflicting findings. Results from individual fixed effects models show that much of the lower cognitive function of current and former smokers relative to never smokers can be attributed to unobserved differences between these groups.

Age differences in the reaction to incentives – A test of the successful ageing extension of Social Production Functions Theory

Abstract: The “aging employee” has recently become a hot topic in many fields of behavioral research. With the aim to determine the effects of different incentive schemes (piece rate, competition, choice between piece rate and competition, social or increased monetary incentives) on performance of young and older subjects, we look at behavior of a group of younger and older adults on a well-established real effort task. Based on the theory of Social Production Functions, we hypothesize age effects that depend on the incentive schemes used. We show that older adults are less productive than younger adults in all conditions, but that different incentive schemes exert similar influences on productivity in both age groups. While we do not find a significant age difference in competitiveness and reject the age-related predictions of the Social Production Functions Theory, we replicate the gender difference in competitiveness found in the literature. Social incentives in men have an at least as strong or even stronger effect on performance than increased monetary incentives. Women do not show an increase in performance with social incentives.