Population aging and the extended family in Taiwan

Population aging produces changes in the availability of kin with uncertain implications for extended living arrangements. We propose a highly stylized model that can be used to analyze and project age-specific proportions of adults living in extended and nuclear households. The model is applied to Taiwan using annual data from 1978-1998. We estimate cohort and age effects showing that more recently born cohorts of seniors are less likely to live in extended households, but that as seniors age the proportion living in extended households increases. The effect of individual aging has diminished over time, however. The proportion of non-senior adults living in extended households has increased steadily because changes in the age structure have increased the availability of older kin. The model is used to project living arrangements and we conclude that the proportion living in extended households will begin to decline gradually for both seniors and non-seniors. The extended family is becoming less important in Taiwan, but it is not on the way out.family, household, living arrangements, population aging, Taiwan

Charting the Economic Life Cycle

Understanding the economic lifecycle %u2013 how it varies and why %u2013 is important in its own right, but is also critical to understanding how changes in population age structure influence many features of the macroeconomy. Economic behavior over the life cycle can be summarized by the average levels of consumption and labor earnings at each age, as shaped by biology, culture, institutions and individual choice. Here we present estimates of these in detail for the US and Taiwan, showing the roles played by public and familial transfer systems as well as asset accumulation, and present more basic profiles for selected additional countries drawing on studies from a larger project. Average economic dependency occurs when consumption exceeds labor earnings, typically in childhood and old age. A changing population age distribution alters the relative numbers of weighted consumers and producers, as summarized by the support ratio. The %u201Cdemographic dividend%u201D occurs during a sustained period of improving support ratios during the demographic transition, as can be shown using these profiles. The estimated cross-sectional age profiles of labor income have a broadly similar hump shape. However, there are striking contrasts in the timing of earnings over the life cycle. The consumption profiles reveal even more striking contrasts, with a flat age profile of total adult consumption in Taiwan and a steeply rising one in the U.S. We believe these differences reflect the extended family versus the state as the primary locus of transfers to the elderly. Profiles for private consumption are also quite variable, with Indonesia peaking early around age 25, Taiwan being essentially flat, and the US peaking late at around 55. Private expenditures on education show wide variations, with unusually high expenditures in some Asian countries. Because of possible public-private substitutions, it is questionable to assign causality to either for differences in total consumption, but it is hard to avoid noticing that without public spending on Medicare and institutional Medicaid in the U.S., total consumption would decline after 55, whereas with them, it rises strongly. There is only a short period of life during which production exceeds consumption barely more than 30 years in the US, Taiwan, and Thailand. The brevity of this phase contrasts sharply with high life expectancy, approaching 80 years in many countries.

Human Capital Spending, Inequality, and Growth in Middle-Income Asia

Asia’s rapid population aging fortifies the case for strengthening human capital investments. Further, the experience of the newly industrialized economies suggests that human capital investments will be a vital ingredient of the transition from middle income to high income. Those investments can also affect equity and public finances. In this paper, we use data from the National Transfer Accounts to empirically analyze the effect of human capital investment in Asian countries on economic growth, inequality, and fiscal balance. Our empirical evidence suggests that human capital investments have a positive effect on labor productivity and, hence, output. The positive effect is stronger for poorer households and, hence, beneficial for equity. We also find that such investments can generate sufficient tax revenues to improve the fiscal balance. Overall, our evidence points to a positive effect of human capital on growth, equity, and fiscal balance in Asia

Why Does Population Aging Matter So Much for Asia? Population Aging, Economic Security and Economic Growth in Asia

Asia as a whole is experiencing a rapid demographic transition toward older population structures. Within this broader region-wide trend, there is considerable heterogeneity, with different countries at different stages of the demographic transition. In this paper, we document Asia’s population aging, describe the region’s old-age support systems, and draw out the regional socioeconomic implications of population aging and old-age support systems. Population aging gives rise to two fundamental challenges for the region – (1) developing socioeconomic systems that can provide economic security to the growing number of elderly and (2) sustaining strong growth in the face of aging over the next few decades. Successfully addressing those two challenges will be vital for ensuring Asia’s continued economic success in the medium and long term.

The Effect of Mandatory Employer-Sponsored Insurance (ESI) on Health Insurance Coverage and Labor Force Utilization in Hawaii: Evidence from the Current Population Survey (CPS) 1994-2004

Using data from the Current Population Surveys, we examine the impact of Hawaii’s mandatory employer-sponsored insurance on health insurance coverage and employment structure in Hawaii. We find empirical evidence of three phenomena. First, private employer-sponsored insurance coverage for full-time workers (more than 20 hours per week) is more prevalent in Hawaii, other things held constant, than in other states and the U.S. as a whole. Second, there is avoidance of the employer-mandate in Hawaii by skirting the 20 hour rule, which changes the both the distribution of employment and the distribution of employment-based insurance coverage by hours worked. Third, Hawaii workers who match with part-time jobs without employer-sponsored health insurance obtain publicly provided health insurance or military coverage with higher probability than their counterparts elsewhere in the U.S. These results suggest that employer mandates induce both higher rates of coverage and labor market sorting.health insurance, employee sponsored insurance, Hawaii's labor market

Better work opportunities for older adults would benefit the South Korean economy

For more about the East-West Center, see http://www.eastwestcenter.org/Over the next 30 years, the share of South Korea's population age 65 and older is projected to grow from 15 to 40 percent. Given this extreme rate of population aging, Korean policymakers face two critical challenges--ensuring an adequate level of support for the elderly while maintaining robust economic growth. Keeping healthy older people in the labor force can help achieve both these goal