Working Papers

The Intergenerational Elasticity of Earnings: Exploring the Mechanisms

with Uta Bolt, Jamie Hentall MacCuish and Cormac O'Dea

ABSTRACT: Using data covering a single cohort's rst 55 years of life, we show that most of the intergenerationalelasticity of earnings (IGE) is explained by dierences in: years of schooling, cognitive skills, investmentsof parental time and school quality, and family circumstances during childhood. To decomposethe fraction of the IGE explained by each of these channels, we implement a multi-level mediationanalysis combined with a latent factor framework that accounts for measurement error. Multilevelmediation analysis allows us to assess not only the direct eect of each channel on the IGE, but alsoits indirect eects working through the other channels, thus providing an in-depth understanding ofthe link between parents' and children's earnings. Of these channels, we show that the main driver ofthe IGE is increased levels of parental investments received by children of high income parents early intheir lives, which encourages greater cognitive development and lifetime earnings.

What will the cardiovascular disease slowdown cost? Modelling the impact of CVD trends on dementia, disability and economic costs in England and Wales from 2020-2029.

with Brendan Collins and others

ABSTRACT: We model the health impact and economic costs of the recent slowing of the historical decline in cardiovascular disease (CVD) incidence. After previous, dramatic falls, CVD incidence has recently plateaued. That slowdown could substantially increase health and social care costs over the next ten years. Healthcare costs are likely to increase more than social care costs in absolute terms, but social care costs will increase more in relative terms. Given the links between COVID-19 and cardiovascular health, effective cardiovascular prevention policies need to be revitalised urgently.

Dementia and Disadvantage in the United States and England: Population-based comparative study

with Karolos Arapakis, Eric Brunner and Jeremy McCauley

ABSTRACT: We compare dementia prevalence and how it varies by socioeconomic status (SES) across the United States and England. There is inequality in dementia prevalence according to income, wealth, and education in both the US and England. England has lower dementia prevalence and a less steep SES gradient. Most of the cross-country difference is concentrated in the lowest SES group, which provides evidence that disadvantage in the United States is a disproportionately high risk factor for dementia.

The Dynamic Effects of Health on the Employment of Older Workers

with Richard Blundell, Jack Britton and Monica Costas Dias

ABSTRACT: Using data from the Health and Retirement Study (HRS) and the English Longitudinal Study of Ageing (ELSA), we estimate a dynamic model of health and employment. We estimate how transitory and permanent health shocks a.ect employment over time. We .find that permanent shocks have much bigger effects on employment than transitory shocks, and that these permanent shocks are long lived. We also show that accounting for these facts lead to larger estimates of the effect of health on employment than what simple OLS estimates of health on employment would imply.

Couples and Singles' Saving after Retirement

with Mariacristina De Nardi, John Jones and Rory McGee

ABSTRACT: We model the saving problem of retired couples and singles facing uncertain longevity and medical expenses in presence of means-tested social insurance. Households can save to self-insure against uncertain longevity and medical expenses, and to leave bequests. Individuals in a couple can be altruistic towards their spouse and other heirs and split bequests optimally. Single people can care about leaving bequests to children and others. Using AHEAD data, we first estimate the model and we then evaluate the relative importance of the various savings motives and the risk exposure of couples' vs. singles.

The Effect of Disability Insurance Receipt on Mortality

with Bernard Black, Jeremy McCauley and Jae Song

ABSTRACT: This paper estimates the effect of Disability Insurance and Supplemental Security Income benefits on mortality. Exploiting the random assignment of judges to disability insurance cases, we find benefit allowance increases 10-year mortality rates for individuals on the margin of receiving or being denied benefits by 2.8 percentage points. However, we find that allowance reduces mortality among those who are observably and unobservably less healthy. Since most disability beneficiaries are less healthy than marginal applicants, our findings suggest that for maximising the longevity of applicants, current disability allowance thresholds are about the right level.

The Effect of Disability Insurance Receipt on Labour Supply: a Dynamic Analysis

with Bernard Black, Jeremy McCauley and Jae Song

ABSTRACT: This paper estimates the effect of Disability Insurance receipt on labor supply, accounting for the dynamic nature of the application process. Exploiting the effectively random assignment of judges to disability insurance cases, we use instrumental variables to address the fact that those allowed benefits are a selected sample. We find that benefit receipt reduces labor force participation by 26 percentage points three years after a disability determination decision when not considering the dynamic nature of the applications process. OLS estimates are similar to instrumental variables estimates. We also find that over 60% of those denied benefits by an Administrative Law Judge are subsequently allowed benefits within 10 years, showing that most applicants apply, re-apply, and appeal until they get benefits. Next, we estimate a dynamic programming model of optimal labor supply and appeals choices. Consistent with the law, we assume that people cannot work and appeal at the same time. We match labor supply, appeals, and subsequent allowance decisions predicted by the model to the decisions observed in the data. We use the model to predict labor supply responses to benefit denial when there is no option to appeal. We find that if there was no appeals option, those denied benefits are 35 percentage points more likely to work. However, there is considerable heterogeneity in responses. Most individuals in their 40s would return to work if denied benefits, for example. Our results suggest that many of those denied benefits not because they are unable to work, but because they remain out of the labor force in order to appeal their benefit denial.

The Effect of the Affordable Care Act on the Labour Supply, Savings and Social Security of Older Americans

with John Jones and Hans-Martin von Gaudecker

ABSTRACT: This paper assesses the effect of the Affordable Care Act (ACA) on the labor supply of Americans ages 50 and older. Using data from the Health and Retirement Study and the Medical Expenditure Panel Survey, we estimate a dynamic programming model of retirement that accounts for both saving and uncertain medical expenses. Importantly, we model the two key channels by which health insurance rates are predicted to change: the Medicaid expansion and the subsidized private exchanges.

Comparing Death Data from the Social Security Administration and the National Center for Health Statistics, 1990-2013

with Bernard Black, Jeremy McCauley, Leticia Faria de CarvalhoNunes and Jae Song

ABSTRACT: In the past, the best source for U.S. mortality information has been the National Death Index (NDI). The Social Security Administration (SSA)’s restricted access “Numident” file and the publicly available Death Master File (DMF) have been substantially less complete. We report evidence that the SSA Numident file has substantially improved in recent years. For those ages 20 and older, the Numident data now approaches the NDI in completeness; the two datasets are nearly equivalent for ages 60 and older. However, this good news applies only to the Numident file, which is not publicly available and is thus only sometimes available to researchers. Legal changes governing which Numident deaths are reported in the DMF have made more recent versions of the DMF highly incomplete and unusable for research purposes.