Volume 12 Issue 3 - January 2012
Key Findings: 2011 MRRC Papers
Do Stronger Age Discrimination Laws Make Social Security Reforms More Effective? by David Neumark and Joanne Song
- In states with stronger protections against age discrimination in the labor market, older individuals were more responsive to increases in the Social Security Full Retirement Age (FRA).
- Where state laws applied to small firms not covered by the Age Discrimination in Employment Act (ADEA), employment increased more at ages that were initially beyond but subsequently lower than the FRA -- i.e., for those older individuals "caught" by increases in the FRA.
- Where the state laws provided stronger remedies (harsher penalties), the response to the increase in the FRA was stronger for both employment and claiming Social Security benefits.
- We also find some evidence that these impacts of state age discrimination laws were stronger when, under state law, attorneys’ fees are recoverable.
The Effects of the Financial Crisis on Actual and Anticipated Consumption by Michael Hurd and Susann Rohwedder
- Among 50-65 year olds, household-level spending declines attributable to the recession ranged between 3.5 percent and 7.0 percent.
- For those over the age of 65, the spending declines were smaller, about 2.4%.
- In both age groups, stock owners experienced larger spending declines than those not owning stocks.
- The declines were concentrated in big ticket items (-7.3 percentage points), dining out (-15.9 percentage points), and housing (-8.5 percentage points).
- Older households (age 66+) showed greater spending declines in food eaten at home, clothing, and household supplies and services than those age 50-65. However, the older age group increased donations and gifts, unlike the younger age group (+12% vs. -2.0%), possibly because of the need to help support younger family members.
The Influence of Public Policy on Health, Wealth and Mortality by John Karl Scholz and Ananth Seshadri
- We develop a dynamic model of household behavior that blends a model of health capital and production to better understand the links between health, wealth and aging.
- The model we develop matches quite closely the joint distribution of medical expenditures and wealth over time observed in data.
- When Medicare is eliminated in our simulation, poor households experience a drop in income by more than their richer counterparts, which leads to a cutback in medical spending, resulting in higher mortality at both age 60 and at age 75.
- While most models assume that households will respond to an absence of social insurance in old age by engaging in precautionary saving, our model shows that poor households largely run down their health capital in response to an absent or withdrawn safety net.
- Short-run changes in survival probabilities, even to very large policies affecting the elderly, appear to be small because health capital is largely determined by the time an individual reaches retirement. Long-run changes can be substantial, however. With fewer lifetime resources households will both consume less and die earlier.