Monday, May 21, 2018

New papers from the National Bureau of Economic Research

Labor Force Participation of the Elderly in Japan by Takashi Oshio, Emiko Usui, Satoshi Shimizutani - #24614 (AG PE)


Japan experienced increases in labor force participation (LFP) of the elderly in recent years, as have other advanced countries.

In the present study, we overview the employment trend of the elderly in Japan, and examine what factors have contributed to its increase since the early 2000s. Improved health and longevity, increasing education levels, and a shift towards less physically demanding jobs have allowed the elderly to stay longer in the labor force. However, elderly employment rebound and its timing are more closely linked to changes in social security incentives, especially increases in the eligibility age for public pension benefits. More broadly, reduced generosity in social security programs since the mid-1980s has been a key driver of the long-term trend change in elderly employment. A series of social security reforms have helped utilize the elderly's potential work capacity, accumulated due to improving health conditions and other favorable factors for LFP in the elderly.

Long-run Trends in the Economic Activity of Older People in the UK by James Banks, Carl Emmerson, Gemma Tetlow - #24606 (AG)


We document employment rates of older men and women in the UK over the last forty years. In both cases growth in employment since the mid 1990s has been stronger than for younger age groups. On average, older men are still less likely to be in work than they were in the mid 1970s although this is not true for those with low education. We highlight issues with using years of schooling as a measure of educational achievement for analysing labour market trends at older ages, not least because a large proportion of men who left school at young ages without any formal qualifications, have subsequently acquired some.

Reforms - such as the abolition of the earnings test and rises in the female State Pension Age, have pushed up employment rates.

But other factors - such as the shift from defined benefit to defined contribution pensions being offered by private sector employers and the growth in employment rates at younger ages among successive cohorts of women - are also important. We discuss the role of other cohort and economy-wide trends, highlighting that the proportion of older men and women employed in professional, managerial and technical occupations has been particularly strong.

Early Social Security Claiming and Old-Age Poverty: Evidence from the Introduction of the Social Security Early Eligibility Age by Gary V. Engelhardt, Jonathan Gruber, Anil Kumar - #24609 (AG HC LS PE)


Social Security faces a major financing shortfall. One policy option for addressing this shortfall would be to raise the earliest age at which individuals can claim their retirement benefits. A welfare analysis of such a policy change depends critically on how it affects living standards. This paper estimates the impact of the Social Security early entitlement age on later-life elderly living standards by tracing birth cohorts of men who had access to different potential claiming ages. The focus is on the Social Security Amendments of 1961, which introduced age 62 as the early entitlement age (EEA) for retired-worker benefits for men. Based on data from the Social Security Administration and March 1968-2001 Current Population Surveys, reductions in the EEA in the long-run lowered the average claiming age by 1.4 years, which lowered Social Security income for male-headed families in retirement by 1.5% at the mean, 3% at the median, and 4% at the 25th percentile of the Social Security income distribution. The increase in early claiming was associated with a decrease in total income, but only at the bottom of the income distribution. There was a large associated rise in elderly poverty and income inequality; the introduction of early claiming raised the elderly poverty rate by about one percentage point. Finally, for the 1885-1916 cohorts, the implied elasticity of poverty with respect to Social Security income for male-headed families is 1.6−. Overall, we find that the introduction of early claiming was associated with a reduction in income and an increase in the poverty rate in old age for male-headed households.

Pauvrete, Egalite, Mortalite: Mortality (In)Equality in France and the United States by Janet Currie, Hannes Schwandt, Josselin Thuilliez - #24623 (AG CH HC HE)


We develop a method to compare levels and trends in inequality in mortality in the United States and France in a similar framework.

The comparison shows that while income inequality has increased in both the United States and France, inequality in mortality in France remained remarkably low and stable. In the United States, inequality in mortality increased for older groups (especially

women) while it decreased for children and young adults. These patterns highlight the fact that despite the strong cross-sectional relationship between income and health, there is no necessary connection between changes in income inequality and changes in health inequality.

Changes in Nutrient Intake at Retirement by Melvin Stephens Jr., Desmond Toohey - #24621 (AG LS PE AP)


While the literature finding a decrease in food expenditures at retirement suggests households do not adequately save for retirement, subsequent evidence that nutrient intake is unaffected by retirement has tempered these concerns. We further examine nutrient intake changes at retirement both by analyzing a much wider range of datasets, including longitudinal data, and by improving upon the empirical methodology used in earlier work.

Our analysis yields four main results. First, unlike prior work, we find that caloric and nutrient intake fall at retirement in numerous cross-sectional datasets. We can reconcile these contrasting results as being due to well-documented differences and improvements in methodologies used to measure food intake.

Second, using longitudinal data, we also find that intake falls at retirement. Third, we show that a food consumption index used in prior work to capture the relationship between permanent income and foods eaten can severely underestimate the impact of retirement on consumption. We show that a minor methodological revision circumvents this bias and that the revised consumption index falls at retirement. Finally, while unemployment reduces the consumption index, we find, in contrast to prior work, that the impact of retirement on the consumption index is larger.

Overall, we consistently find that retirement reduces food intake.

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