Economics
of Ageing in Europe (AGE)
RTN
European
Program HPRN-CT-2002-00235
1.
Project Objectives
The objective of the research
network on the Economics of Ageing in Europe is to improve the
understanding of the economic decisions of the elderly, in particular
with respect to saving, portfolio choice, retirement, health
expenditures, and intergenerational transfers. The Participants will
provide training in applied research on the socio-economic
circumstances of individuals as they age, on the implications of
population ageing, on the well being of older persons, and on
how individual decisions are affected by the economic incentive
effects of government policies and programs.
The network will participate trainees
in the analyses of the key domains that it sees as crucial in
understanding the economic issues raised by the ageing population. In
each of these domains the Participants will concentrate and add to the
existing evidence in three ways:
(i)
direct provision of evidence: applied microeconometric
evidence on individual or household behaviour; methodological studies
relating to the measurement or analysis of economic behaviour;
economic analysis of policy options and policy reform;
(ii)
pooling of knowledge relating to cross-national
differences in household behaviour, institutional variation and
available data sources, along with generation of harmonised research
agendas, to facilitate collaborative and comparative work;
(iii)
provide linkages to other studies and other networks
considering the same issues outside the EU, and draw from such
networks and studies wherever possible.
This
set of general objectives will form the basis of research, training
and networking activities in each of the themes. These are: ageing and
household saving; pensions, social security and labour market
behaviour; the relation between health and economic resources; saving
and portfolio decisions; consumption and material living standards of
the elderly; intergenerational transfers and the role of family
transfers and the interaction with state transfers.
2.
Research method
The
Participants will draw data from household level surveys from many
different countries, make extensive use of frontier microeconometric
analysis, and exploit the difference in institutions to understand
issues relevant for the economics of ageing.
-
Microeconomic
data.
The trainees and the researchers at each node will rely
extensively on large household datasets. Table 1 provides basic
information about the datasets which will be used by the
Participants. These data will be used not only by the individual
teams to perform analysis that pertains to the country concerned,
but also in comparative studies across countries. Good quality
data sources that contain information on expenditure, labour
supply behaviour, wealth, portfolio composition, and health are
far and few between. Moreover, while several datasets contain
information on some variables, no dataset contains information on
all the variables of interest. Even more rare are datasets with
sizeable longitudinal components. Therefore the Participants see
as important to promote and use new data sources.
-
Microeconometric
analysis.
The hallmark of research on the economics of household choices in
the last two decades has been the reliance on large
household-level data and it is now clear that aggregation problems
are too serious to be neglected. Moreover, distributional issues
and the dynamics of wealth and inequality are important research
issues per se and involve the consideration of individual level
data. In this respect several dimensions are crucial. First, the
household-level analysis of issues such as portfolio choice,
health outcomes, demographic effects of pension reforms on saving
and wealth, requires careful modelling of econometric models with
sample selection and limited dependent variables. Second, the
analysis of reforms and the comparison between countries can
benefit from experimental policy evaluation methods. Third, in
several countries panel data on income, wealth, consumption and
labour market histories are available, requiring specific
econometric tools. Fourth, the analysis of survey data requires
econometric and statistical tools to analyse response rates,
reasons for non-response, and different interviewing methods.
Finally, it is important to develop and use statistical and
econometric techniques that allow the most efficient use of
existing data sources. In particular, it is important to use
techniques that allow researchers to combine in a methodologically
consistent fashion complementary data sources. Time series of
cross sections can be used to construct synthetic panels and
remedy, to some extent, the lack of longitudinal data. Surveys
containing information on labour supply variables can be combined,
using grouping techniques, with data containing wealth and/or
consumption information.
-
The
international dimension.
The increasing availability of microeconomic data for many
countries together with the growing international connections
among researchers of different countries, have allowed research to
focus increasingly on international differences in institutions
and market characteristics as determinants of household behaviour.
There are three areas where the strategy of comparing research
based on micro data from different countries is likely to be
particularly fruitful for the study of the economics of ageing:
the social security system, the health system and household
portfolio choice. The three areas are not only very exciting
research areas but also key to social welfare and economic growth
in Europe and elsewhere in the near future. Institutions - such as
pension arrangements, health care systems, regulation of financial
markets - vary considerably across countries in Europe. A full
understanding of the specific institutional arrangements is
clearly necessary for understanding the issues in the economics of
ageing and for sensible policy analysis. Comparative work is of
fundamental importance, but it is also very difficult to carry on
by individual researchers or research team of a single country. It
is therefore important to rely on the institutional knowledge of
research teams based in different countries and on joint work.
3.
Work Plan
The
project requires theoretical modelling using analytical and
computational methods and extensive empirical work that applies
state-of-the-art econometric techniques to the considerable array of
household-level databases that members of the network have built or
can access. Interaction between nodes will pool available expertise
and data in comparative analysis of household behaviour, policy issues,
and institutions relevant to the Economics of Ageing in Europe. The
six themes described in Section 1 will serve as focal points for
training, research collaboration and interaction between partners and
affiliated nodes.
-
Ageing
and household saving.
Saving for retirement and liquidation of assets to finance
expenditures during retirement are issues central to the project.
All nodes will participate in analysis of these issues. The unique
databases and expertise on behaviour of the elderly available at
our US affiliate, RAND, will allow comparisons of behaviour,
policy issues, and policy approaches in European countries and in
the United States.
-
Pensions,
social security and labour market behaviour.
The
role of pension systems and social security provisions in
determining retirement age, post-retirement work, and generally
labour force participation is an important issue on which The
Participants envisage collaboration of most nodes. As these issues
are highly topical and of considerable relevance for policymaking,
the Participants plan extensive interaction between our nodes and
our affiliated experts at the Italian and Spanish central banks.
-
The
relation between health and economic resources.
Health expenditures and health conditions have important effects
on economic resources of the elderly. Six of our eight nodes have
research expertise on these interactions. They will join forces
with the US experts on such issues at our affiliated US node (RAND),
to deliver insightful comparative analysis useful for European
policy making.
-
Saving
and portfolio decisions.
The optimal mix between risky and riskless, financial and real,
liquid and illiquid assets is crucial to forming portfolios for
retirement. The rate at which such accumulations are liquidated to
finance post-retirement expenditures can be crucial to the well
being of the elderly. The extent to which policy can influence
accumulation and decumulation of different assets is a topic of
major interest among policy makers. This is an area where the
research expertise of virtually all nodes will be combined with
the policy expertise and detailed data available at our affiliates
on both sides of the Atlantic.
-
Consumption
and the material living standards of the elderly.
The four of our eight nodes who have access to consumption data
will join forces with our affiliates in the Bank of Spain to study
consumption behaviour and the material well being of the elderly.
The nodes assigned to this task have considerable expertise in
micro-econometric analysis of consumption behaviour and interest
in welfare aspects of the economics of ageing.
-
Intergenerational
transfers and the role of the family.
Modelling of intra family exchanges and transfers is important for
understanding the behaviour of the elderly. Six of the eight nodes
will combine theory with data analysis in order to study the
nature and extent of such exchanges. Two of our affiliated nodes (Bank
of Italy and RAND) have built databases containing very useful
information on intra family transfers and have developed
significant insights into the analysis of such issues. Their
interaction with researchers in the five nodes interested in
analysing such issues should prove particularly fruitful for
shedding light on these largely under-researched topics.
Papers
produced in each theme will be submitted and published in top academic
journals. The Participants also plan to publish conference volumes as
an incentive to generate papers on particular topics. Each volume will
combine one or two of the 6 themes of the project. For these volumes
the Participants will solicit papers also from members of the
affiliated nodes and target top publishers. Solicited papers will get
presented in the relevant theme conferences, along with other papers
on the same theme or on other themes in the network.
Copyright © 1997 Dipartimento di Scienze
Economiche - Aggiornato il
23 marzo 2009
