OP76 Economic Contributions Of Older Adults In Europe

Abstract

INTRODUCTION:Europe's population is aging rapidly. Europeans aged 60 years and over formed only 16 percent of Europe's total population in 1980, but they now constitute 24 percent and will grow to 34 percent by 2050 (1). These challenges may be expected in the form of tighter labor markets, lower savings rates, and slower economic growth, as well as fiscal stress from lower earnings and tax revenue and increased pension and healthcare spending.We may, however, overestimate the magnitude of these challenges and make poorer policy choices if we underestimate the productive contributions that older adults make to society. The literature measuring these productive contributions is regrettably underdeveloped, as is the literature on what policies can enhance such contributions.This study focuses on the market and non-market productive contributions of older adults in Europe and addresses three questions: (i)What is the nature and magnitude of the contributions made by older adults in Europe?(ii)How do those contributions vary by country, time, and age, and how are they likely to evolve as the relative size of older cohorts swells?(iii)How might changes in policy, institutions, behavior, and health likely influence the economic effects of population aging in Europe?METHODS:These research questions are explored using multivariate statistical tools to analyze rich data from multiple countries and waves of the Survey of Health, Ageing, and Retirement in Europe (SHARE) and the English Longitudinal Study of Ageing (ELSA).RESULTS:Older adults in Europe make significant productive contributions in the form of labor force participation, caregiving for family and friends, and volunteering. These contributions vary widely by country and are correlated with age, health status, official retirement age, and population age structure.CONCLUSIONS:The economic effects of population aging in Europe can be significantly moderated by effective retirement and healthcare policy.

Putting People Back into the Picture: Some Studies in Demographic Economics

“…The activities by which older adults contribute economically include (1) formal employment-although the labor force participation rate is smaller than for younger age groups, (2) volunteering, (3) taking care for grandchildren, (4) providing support for other household members, and (5) providing support for others outside of the household. Bloom et al (2020b) find that, on average, older adults contribute 9700 Euro in the studied European economies, whereas they contribute 17,200 Euro in the US. According to the authors, the main part of the economic contribution of older adults are monetized productive non-market activities.…”

“…In the following, we discuss the main insights from the papers in this special issue in more detail. Bloom et al (2020b) assess the economic contribution of older adults (aged 60 and over) in terms of the value generated by market activities and productive non-market activities. The activities by which older adults contribute economically include (1) formal employment-although the labor force participation rate is smaller than for younger age groups, (2) volunteering, (3) taking care for grandchildren, (4) providing support for other household members, and (5) providing support for others outside of the household.…”

“…As a consequence, while raising the retirement age would likely lead to a higher contribution of older adults in terms of market activities, this could be offset to a considerable extent by a corresponding reduction in productive non-market activities. Finally, Bloom et al (2020b) decompose the reduction of the economic contribution of older adults that come with a negative health shock. They find that such a shock leads to a greater reduction in market activities for men than for women but to a greater reduction in productive non-market activities for women than for man.…”