SHARE and its Policy Lessons from

International Comparisons

Axel Börsch-SupanCoordinator

SHARE IsraelVan Leer Institute, Jerusalem, 17 October 2012

Look over the fence and learn from others Benchmarking US vs. Europe & Israel

How do public policies work? Do they reach their intended aims?

Do they avoid unintended side-effects?

– macro level– micro level

– macro level– micro level

Cross-national variation of policies

Cross-national data:

SHARE

International comparisons

Example 1: Does spending for the old crowd out spending for the young? (Börsch-Supan and Reil-Held)

Figure 11: Relative Generosity to the Elderly vs. the Young (Expenditure per capita devoted to the elderly versus per capita spending devoted to the young, Euro PPP)

EU90

DK90

DE90

GR90

ES90

FR90

IE90

IT90

NL90AT90

PT90

UK90

EU95

DK95

DE95

GR95

ES95

FR95

IE95

IT95

NL95AT95

PT95

FI95SW95

UK95

EU00

BE00

DK00

DE00

GR00ES00

FR00

IE00

IT00

NL00

AT00

PT00

FI00SW00

UK00

EU03

BE03

DK03

DE03

GR03ES03

FR03IE03

IT03

NL03

AT03

PT03

FI03SW03

UK03

050

010

0015

0020

00yo

ung

1000 2000 3000 4000 5000old

IT

DK

FR

EUDE

No convincing relation to age structure of country!

Per capita expenditure dedicated to the elderlyPer

cap

ita e

xpen

ditu

re d

edic

ated

to th

e yo

ung

Compare time trend by country

Example 2: The effect of health care spending on health status(Hendrik Jürges)

● US

15 16 17

Example 3: Is retirement really bliss? Mental retirement : early retirement and cognition(Adam, Bonsang, Perelman et al. 2007; Rohwedder and Willis 2010)

Example 4: The lump of labor fallacy(Börsch-Supan with OECD employment data)

R2 = 0,1007

10

20

30

40

50

60

70

0 5 10 15

SpainNetherlands

Unemployment rate

Sha

re o

f 60-

64 y

ear

old

mal

es a

lread

y re

tired

Japan

USA Sweden

FranceBelgium

Italy

CanadaGermany

UK

Share of early retireesamong males 60-64 (in %)

Unemployment rate (in %)

The old should make place…

…for the young!

Causality issues in analyses based on cross-national data

Macro evidence needs micro foundation: usually many other influential variables aggregates almost always simultaneously determined

Gold standard: laboratory experiments in natural sciences usually not an option for policy evaluation replace by “historical (natural) experiments”

Even in micro data: selectivity and reverse causality time as strongest instrument: longitudinal panel data policy changes (“regression discontinuity designs”)

Design of SHARE

PLCZ

IEEE

PT SI HU

SE

DK

DE

CH

FR

SP IT

GR

BENLLU

ATWave 4 participation (2010):plus EE, LU, HU, SI, PT: now 20 countries

Wave 1 participation (2004):11 countries: NL, DE, AT, DK, BE, FR, CH, SP, IT, GR, SE (+UK)Waves 2 and 3 (2006 and 08):plus CZ, PL, IE, IL: 15 countries

IL

UK

KoreaJapanChina

India

SHARELAND

62,000 resps, 130,000 i‘views

Mexico, Brazil, Argentina

Europe as a Laboratoryin a global network

Generic survey instrumentto conduct Computer AssistedPersonal Interviews (CAPI)

Internet basedtranslation tool (LMU)

Online overviewof country specifics

Minimize artifacts:Ex-ante harmonization

Objective measures of health help distinguishing actual differences in health from different response styles to extract genuine policy effects

Source: Jürges, 2006

Minimize artifacts:Performance measures and biomarkers

Result: Reporting styles of general health status indicators

Mental retirement: Rohwedder and Willis

Use pension policies as instruments to isolate causal direction

Mental retirement

Early retirement: bliss or detriment? Very controversial since causality is everything:

health early retirement early retirement health

Börsch-Supan and Jürges 2006: Life satisfaction after early retirement Adam, Bonsang, Perelman et al. 2007: Depreciation of cognitive

reserve after early retirement Coe, Lindeboom (et al.) 2008+: Does early retirement kill? Zweimüller et al 2010: Plant closures and mortality Rohwedder and Willis 2010: Mental retirement Bonsang, Perelman et al. 2010: Cognitive functioning Coe, Gaudecker, Lindeboom & Maurer 2012: Early retirement and

cognition Fabrizio Mazzoni 2013: Cognitive functioning

Cross-cutting policy results Guglielmo Weber: Parental status and Retirement income

Importance of intergenerational linkages: Books in parental home increase early earnings. Effects persists onto later earnings.

Mathis Schröder: Health and EmploymentExperience of redundancy reduces health at retirement. Unemployment benefits appear to reduce this effect.

Agar Brugiavini: Work and Retirement IGaps in employment history reduce retirement income. Maternity benefits first increases female LFP, thus retirement income, but U-shape pattern

Johannes Siegrist/Morten Wahrendorf: Work and Retirement IIWork quality improves health at retirement. Active labour market policies are associated with higher work quality and thus better health

Nicolas Sirven: Health Care Utilisation in EuropeDoctor density helps to improve preventive care, positive effects on health at retirement. Could reduce health disparities across Europe.

Radim Bohacek/Michal Myck: Histories of WarStrong effects of persecution on later-life health and income situation  

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Figure 6: Labor Force Participation of youth, young and elderly males

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

year

parti

cipa

tion

rate

lfpm25-54

lfpm55-59

lfpm20-24

lfpm60-64

lfpm15-19

Source: German Mikrozensus

Shocks to the system: 1972, 1984 and 1997

Exploit “policy experiments”: Pension policy changes and youth employ. (Börsch-Supan/Schnabel)

Use pension policy discontinuities to show the fallacy in the „lump of labor“

Further aims: The Crisis

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….there is still a lot more to happen,

and to find out!

e.g., on the long-term effects of the crisis and effectiveness of policy interventions (old age poverty, health, labor market participation,…)

especially in countries with funding problems

The SubPrime-Financial-PublicDebt-Euro-Crisis

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….there is still a lot more to happen,

and to find out!

e.g., on the long-term effects of the crisis and effectiveness of policy interventions (old age poverty, health, labor market participation,…)

especially in countries with funding problems

Wave 5-6-7: Scientific aims

Poverty and social exclusion Biomarker collection in all countries,

central laboratory (SDU in DK) Well-being (Sarkozy Commission):

- time use/day reconstruction method - mixed mode: paper/telefone/Internet

Life histories revisited Cognition, productivity and retirement

Conclusions International comparisons very powerful in

detecting, isolating and measuring policy effects

Substantial harmonization efforts necessary to avoid spurious effects through differences in language, institutions, interpretation, and methods

„Historical experiments“ greatly help in identification. Requires genuine panel data, preferably with retrotspecive dimension:

SHARELIFE in connection with administrative records Again: requires knowledge of history

and how the country-specificinstitutions changed

Israel‘s contribution: history, migration, policy experiments

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Use

!