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In 1980, a few years after its democratization process, Spain raised the minimum working age from 14 to 16, while the compulsory education age remained at 14. This reform changed the within-cohort incentives to remain in the educational system. We use a difference-in-differences approach, where our treated and control individuals only differ in their month of birth, to analyze the gender asymmetries in mortality generated by this change. The reform decreased mortality at ages 14–29 among men by 6.4% and women by 8.9%, mainly from a reduction in deaths due to traffic accidents. However, the reform also increased mortality for women ages 30–45 by 7%. This is driven by increases in HIV mortality, as well as by diseases related to the nervous and circulatory systems. We show that women’s health habits deteriorated as a consequence of the reform, while this was not the case for men. The gender differences in the impact of the reform on smoking and drinking should be understood in the context of the gender equalization process that affected women were experiencing when the reform took place. All in all, these patterns help explain the narrowing age gap in life expectancy between women and men in many developed countries while, at the same time, they provide important policy implications for middle-income countries that are undergoing those gender equalization processes right now.

En este artículo presentamos un ejercicio de evaluación causal en el contexto del perfilado estadístico aplicado a un programa de empleo creado por la Fundación “La Caixa” y denominado Incorpora. Este programa consiste en un mecanismo de apoyo y recolocación en el mercado de trabajo de personas en riesgo de exclusión. Nuestros resultados apuntan a que la formación impartida dentro del programa contribuye a una mejora general de la empleabilidad media de los participantes en el programa, pero se observa cómo este efecto decae en el tiempo que el beneficiario está desempleado. Por otra parte, encontramos que el programa Incorpora mejora la probabilidad de encontrar y retener el empleo, así como el tiempo trabajado e incluso el salario una vez reempleado, para todos los colectivos analizados sin importar el género, nacionalidad, sector previo de empleo o experiencia laboral previa. Concretamente, la empleabilidad aumenta entre 3 y 4 puntos porcentuales gracias al programa y el efecto sobre el número de meses acumulados en el empleo se sitúa, dependiendo de la cohorte, entre 3 y 4 meses tres años después de salir del mismo.

In this paper, we exploit the strong incidence of the Great Recession in Spain to estimate the effect of economic conditions on participation in Disability Insurance (DI). Using individual panel data, we show that increases in the local unemployment rate are associated with a reduction in the individual probability to enter the DI program during the Great Recession in Spain. Using aggregate data on applications, we show that this procyclical behavior of DI awards comes from an increase in the proportion of applications that are denied. Thus, contrary to the previous literature that has extensively reported a countercyclical behavior of DI participation, our results provide new evidence that, in periods of extremely recessionary conditions, DI participation may turn procyclical.

This article evaluates the effectiveness of hiring subsidies targeted to people with disabilities. By exploiting the timing of implementation among different Spanish regions of a subsidy scheme implemented in Spain during the period 1990-2014, we employed a difference-in-differences approach to estimate the impact of the scheme on the probability of disability insurance (DI) beneficiaries of transiting to employment and on the propensity of individuals of entering the DI program. Our results show that the introduction of the subsidy scheme is in general ineffective at incentivizing transitions to employment, and in some cases it is associated with an increased propensity of transiting to DI. Furthermore, we show that an employment protection component incorporated into the subsidy scheme, consisting in the obligation for the employer to maintain the subsidized worker in employment, is associated with less transitions to permanent employment, more transitions to temporary employment and more transitions to DI, suggesting that these type of employment protection measures can have undesired effects for people with disabilities.

In England as elsewhere, policy makers are trying to reduce the pressure on costs due to rising hospital admissions by encouraging GPs to refer fewer patients to hospital specialists. This could have an impact on elective treatment levels, particularly procedures for conditions which are not life-threatening and can be delayed or perhaps withheld entirely. This study attempts to determine whether cost savings in one area of publicly funded health care may lead to the increases in cost in another and therefore have unintended consequences by offsetting the cost-saving benefits anticipated by policy makers. Using administrative data from Hospital Episode Statistics in England, we estimate dynamic fixed effects panel data models for emergency admissions at Primary Care Trust and Hospital Trust levels for the years 2004–2013, controlling for a group of area-specific characteristics and other secondary care variables. We find a negative link between current levels of elective care and future levels of emergency treatment. This observation comes from a time of growing admissions, and there is no guarantee that the link between emergency and elective activity will persist if policy is effective in reducing levels of elective treatment, but our results suggest that the cost-saving benefits to the NHS from reducing elective treatment are reduced by between 5.6 and 15.5% in aggregate as a consequence of increased emergency activity.

In this paper we analyze the association between financial incentives and retirement decisions using aggregate data for over four decades in Spain. We calculate an implicit tax rate on remaining in employment for an additional year and examine its correlation with employment rates for older workers. The results suggest that financial incentives play a role in explaining the retirement patterns of both employed and unemployed workers.

This paper analyzes the reasons for the scarce development of the private long-term care insurance market in Spain, and its relationship with health insurance. We are also interested in the effects the crisis has had both on the evolution of the demand for long-term care insurance and on the existence of regional disparities. We estimate bivariate probit models with endogenous variables using Spanish data from the Survey on Health and Retirement in Europe. Our results confirm that individuals wishing to purchase long-term care insurance are, in a sense, forced to subscribe a health insurance policy. In spite of this restriction in the supply of long-term care insurance contracts, we find its demand has grown in recent years, which we attribute to the budget cuts affecting the implementation of Spain's System of Autonomy and Attention to Dependent People. Regional differences in its implementation, as well as the varying effects the crisis has had across Spanish regions, lead to the existence of a crowding-in effect in the demand for long-term care insurance in those regions where co-payment is based on income and wealth, those that have a lower percentage of public long-term care beneficiaries, or those with a smaller share of cash benefits over total public benefits. Copyright © 2016 John Wiley & Sons, Ltd.

We explore the effects of a child labor regulation that changed the statutory minimum working age in Spain in 1980. In particular, the reform raised the minimum working age from 14 to 16, while the age for compulsory education remained at 14 until 1990. To study the effects of this change on the incentives to work or study, we consider the different alternatives available at age 14 to individuals born at various times of the year before and after the reform. Before the reform, individuals born at the beginning of the year were legally able to work before finishing compulsory education. We show that individuals born at the beginning of the year were more likely to complete both compulsory and post-compulsory education if they turned 14 after the reform. The increase in educational attainment translates into better labor market outcomes in adulthood only partially. Depending on the level of socioeconomic development of the region, we provide evidence of differential impacts of the reform on men and women and offer plausible explanations for these differences. To the best of our knowledge, this is the first paper that, apart from increases in educational attainment, also finds relevant effects on long-term labor market outcomes from child labor regulations that forbid teenager work. We show that this type of regulation can be a generator of economic development and point to the conditions required for this to be the case.

Similar to other OECD countries, labor force participation rates of Spanish older workers were falling until the mid-1990s when there was a reversal in the trend. Labor force participation rates of Spanish men have been increasing since then, although at a slower pace than in other OECD countries. We explore to what extent several factors can be behind these trends. First, we conclude that the (old-age) social security system (except perhaps for the disability component) has played a marginal (at most) role on this reversal given the lack of major changes in social security benefits until the last set of reforms in 2011 and 2013. Second, we also rule out that changes in the health status of the population are responsible for the reversal of this trend. Finally, we find that aggregate economic conditions, and differences across cohorts in both the skill composition and the labor force attachment of wives are potential drivers of these observed changes.

We use quasi-experimental evidence on the expansion of the public subsidization of long-term care to examine the causal effect of a change in caregiving affordability on the delivery of hospital care. More specifically, we examine a reform that both introduced a new caregiving allowance and expanded the availability of publicly funded home care services, on both hospital admissions (both on the internal and external margin) and length of stay. We find robust evidence of a reduction in both hospital admissions and utilization among both those receiving a caregiving allowance and, albeit less intensely, among beneficiaries of publicly funded home care, which amounts to 11% of total healthcare costs. These effects were stronger when regions had an operative regional health and social care coordination plan in place. Consistently, a subsequent reduction in the subsidy, five years after its implementation, is found to significantly attenuate such effects. We investigate a number of potential mechanisms, and show a number of falsification and robustness checks.

Self-reported home values are widely used as a measure of housing wealth by researchers employing a variety of data sets and studying a number of different individual and household level decisions. The accuracy of this measure is an open empirical question, and requires some type of market assessment of the values reported. In this research, we study the predictive power of self-reported housing wealth when estimating sales prices utilizing the Health and Retirement Study. We find that homeowners, on average, overestimate the value of their properties by between 5% and 10%. More importantly, we are the first to document a strong correlation between accuracy and the economic conditions (measured by the prevalent interest rate, the growth of household income, and the growth of median housing prices) at the time of the purchase of the property. While most individuals overestimate the value of their properties, those who bought during more difficult economic times tend to be more accurate, and in some cases even underestimate the value of their house. This cyclicality of the overestimation of house prices can provide some explanations for the difficulties currently faced by many homeowners, who were expecting large appreciations in home value to rescue them in case of increases in interest rates which could jeopardize their ability to live up to their financial commitments., NIA-NIH Grant Number 5 P01 AG022481-04; Michigan Retirement Research Center; Spanish Ministry of Education through project number SEJ2005-08783-C04-01.

This work sets out to analyze the motivations adult children may have to provide informal care, considering the monetary transfers they receive from their parents. Traditional motivations, such as altruism and exchange, are matched against more recent social bond theories. Our findings indicate that informal caregivers receive less frequent and less generous transfers than non-caregivers; that is, caregivers are more prone to suppress their self-interested motivations in order to prioritize the well being of another person. Additionally, long-term public care benefits increase both the probability of receiving a transfer and its amount, with this effect being more intense for both the poorest and richest households. Our findings suggest that if long-term care benefits are intended to increase the recipients' welfare and represent a higher fraction of total income for the poorest households, the effectiveness of these long-term care policies may be diluted.

This paper studies if a situation of formal care unmet needs is a strong motivation for the onset of caregiving behavior, and if becoming caregiving is a compelling argument for leaving current job (in the presence/absence of formal care unmet needs). We use data from the Eurobarometer 67.3 for 18 European countries and estimate a three simultaneous equations model taking into account the potential endogeneity of labor participation and formal care unmet needs and assuming non-zero correlation among the error terms of the three equations. Results show that individuals who anticipate that becoming caregiver can suppose an obstacle for continuing working feel more refractory and are more prone to avoid caregiving responsibilities. Knowing someone with an unmet needs problem increases the probability of becoming caregiver by +19.23 pp (with a maximum of +39.39 pp for difficult access unmet needs) and raises the probability of leaving employment by 5.77 pp. Having to possibility of receiving economic benefits for caregivers encourage more labor market exit as compared to payment of social security contributions during care leaves.

In this paper, we explore the links between pension reform, early retirement, and the use of unemployment as an alternative pathway to retirement. We use a dynamic rational expectations model to analyze the search and retirement behaviour of employed and unemployed workers aged 50 or over. The model is calibrated to reproduce the main reemployment and retirement patterns observed between 2002 and 2008 in Spain. It is subsequently used to analyze the effects of the 2011 pension reform in Spain, characterized by 2-year delays in both the early and the normal retirement ages. We find that this reform generates large increases in labour supply and sizable cuts in pension costs, but these are achieved at the expense of very large welfare losses, especially among unemployed workers. As an alternative, we propose leaving the early retirement age unchanged, but penalizing the minimum pension (reducing its generosity in parallel to the cuts imposed on individual pension benefits, and making it more actuarially fair with age). This alternative reform strikes a better balance between individual welfare and labour supply stimulus.

This paper studies price determination in pharmaceutical markets using data for 25 countries, six years and a comprehensive list of products from the MIDAS IMS database. A key flnding is that the U.S. has prices that are not signiflcantly higher than those of countries with similar income levels, specially those that are "lightly regulated". More importantly, price difierences to the US levels increase for "branded" or innovative products, and decrease, regardless of the level of regulation for mature or widely difiused molecules. In addition, the nationality of the producer appears to have a small and often insigniflcant impact on prices. We have constructed a theoretical model that accounts for all these flndings simultaneously. One interesting aspect of the model is that it shows that reference pricing confers a degree of protection against government intervention. Thus, there is a sense in which a reference price (or similar) policy in one country becomes a \commitment device¶¶to avoid lowering price in another one.

In a world with limited PAYGO financing possibilities this paper explores whether older Spanish individuals have the health capacity to work longer. For that purpose we use Milligan-Wise and Cutler-Meara Cutler-Meara- Richards-Shubik simulation methods. Our results suggest that Spanish workers have significant additional capacities to extend their working careers.

The remarkable growth of older population has moved long term care to the front ranks of the social policy agenda. Understanding the factors that determine the type and amount of formal care is important for predicting use in the future and developing long-term policy. In this context we jointly analyze the choice of care (formal, informal, both together or none) as well as the number of hours of care received. Given that the number of hours of care is not independent of the type of care received, we estimate, for the first time in this area of research, a sample selection model with the particularity that the first step is a multinomial logit model. With regard to the debate about complementarity or substitutability between formal and informal care, our results indicate that formal care acts as a reinforcement of the family care in certain cases: for very old care receivers, in those cases in which the individual has multiple disabilities, when many care hours are provided, and in case of mental illness and/or dementia. There exist substantial differences in long term care addressed to younger and older dependent people and dependent women are in risk of becoming more vulnerable to the shortage of informal caregivers in the future. Finally, we have documented that there are great disparities in the availability of public social care across regions.

Important policy issues arise from the high and growing number of people claiming disability benefits for reasons of incapacity for work in OECD countries. Economic conditions play an important part in explaining both the stock of disability benefit claimants and inflows to and outflows from that stock. Employing a variety of cross-country and country-specific household panel data sets, as well as administrative data, we find strong evidence that local variations in unemployment have an important explanatory role for disability benefit receipt, with higher total enrolments, lower outflows from rolls and, often, higher inflows into disability rolls in regions and periods of above-average unemployment. In understanding the nature of the cyclical fluctuations and trends in disability it is important to distinguish between work disability and health disability. The former is likely to be influenced by economic conditions and welfare programmes while the latter evolves in a slower fashion with medical technology and demographic changes. There is little evidence of health disability being related to the business cycle, so cyclical variations are driven by work disability. The rise in unemployment due to the current global economic crisis is expected to increase the number of disability insurance claimants.

Introducción El aumento del flujo migratorio hacia España durante los últimos 10 años ha tenido repercusiones importantes en la provisión de servicios públicos clave. En este trabajo analizamos el efecto que ha tenido el aumento de la percepción de una mayor congestión sobre la demanda de seguros sanitarios privados. Métodos Empleando datos recogidos en la Encuesta Nacional de Salud de los años 2001, 2003 y 2006, se plantean modelos dicotómicos de elección discreta para modelizar la demanda de doble cobertura sanitaria (seguro público y privado) y sobre la demanda de cobertura privada de funcionarios públicos. Resultados Los resultados obtenidos apuntan a que tanto el porcentaje de inmigrantes como el incremento de la población resulta en una mayor demanda de seguros médicos privados (muestra de doble cobertura), principalmente en grupos de renta media-alta y con hijos, o en una mayor preferencia por un suministrador privado de atención sanitaria (en la muestra de funcionarios públicos). En ambos casos, esto ocurre para poder acceder con mayor prontitud a servicios especializados y de emergencias privadas. Obtenemos que el efecto marginal utilizando la variable del porcentaje de inmigrantes es mucho mayor en la muestra de funcionarios públicos (cerca de 0,20) que en la muestra de la Seguridad Social (0,05). Conclusiones Pese a que los inmigrantes gozan, en media, de un mejor estado de salud que los españoles y utilizan menos los servicios sanitarios (a excepción de las urgencias), han supuesto un importante aumento de la demanda de atención sanitaria y, en particular, de seguros sanitarios privados. Introduction The wave of immigration in Spain in the last 10 years has had major consequences in the provision of key public services. In the present study, we examined the effect of this population shock on the demand for private health insurance. Methods Using data from the National Health Survey for 2001, 2003 and 2006, we estimated discrete choice models to analyze the demand for dual coverage (public and private insurance) and the demand for private coverage among civil servants. Results The results suggest that both the percentage of immigrants and the increase in the population resulted in greater demand for private health insurance (social security sample), mainly in groups with a middle-to-high income and with children or with a greater choice of private healthcare provider (in the sample of civil servants). In both cases, private healthcare was sought to gain access to specialized and emergency services more rapidly. The marginal effect obtained by using the variable of the percentage of immigrants was much higher in the sample of civil servants (about 0.20) than in the social security sample (0.05). Conclusions Although immigrants tend to enjoy better health and use health services (with the exception of emergencies) less frequently than Spaniards, this collective has led to a significant increase in the demand for healthcare and, especially, private health insurance. Agradecemos el soporte de la Cátedra La Caixa-FEDEA de Economía de la Salud y del proyecto del Ministerio de Educación ECO2008-06395-C05-01.

The initial works council’s wage claim, and the initial firm’s (counter)offer, as well as the fraction of the disputed wages the works council is able to capture conditional on initial disagreement, are analyzed using Spanish data on wage settlements. After a given initial wage claim, the rules of the system force the firm either to accept it or to make a counteroffer prior to a fixed and short deadline. In this context, signaling models predict that the wage claim should try to screen the firm’s level of profitability, while the (most likely forced) offer is expected to reveal little information. Both hypotheses are tested and neither one is rejected. The analysis of the fraction of the disputed wages the workers get after initial disagreement, as well as the length of the negotiation period, provide further evidence in favor of signaling models, since we find they are related to both observed and private information. Moreover, conditional on covariates, for a number of sectors, we cannot reject that the parties “split the difference” between both initial offers. This solution coincides with Rubinstein’s (Econometrica 50:97–109, 1982) wage, the solution for the complete information game.

This paper presents and estimates an attribute-based choice model where pure inertial and pure variety seeking behaviors are incorporated as, sometimes transient, particular cases of a general utility function. In light of the evidence of several state-dependent patterns, the standard framework is extended by considering non-linear partial utilities that allow for a wide spectrum of behavioral patterns. Under the inverted-U hybrid utility assumption, the consumer behaves inertially among unfamiliar items, but eventually switches to variety-seeking behavior when a high level of familiarity with the implied attributes is approached. An empirical analysis is run using scanner databases for fabric softener, saltine cracker, and catsup product categories. Non-linear specifications provide the best fit of the data and reveal that the gradual trend, to seek variety as the level of familiarity with the purchased items increases, can be forecasted with higher predictive ability. The results confirm significant differences in the purchasing patterns across segments, as well as relevant segments presenting hybrid behavior for most attributes.

In this paper we explore the effects of the minimum pension program on welfare and retirement in Spain. This is done with a stylized life cycle model which provides a convenient analytical characterization of optimal behavior. We use data from the Spanish Social Security to estimate the behavioral parameters of the model and then simulate the changes induced by the minimum pension in aggregate retirement patterns. The impact is substantial: there is a threefold increase in retirement at 60 (the age of first entitlement) with respect to the economy without minimum pensions, and total early retirement (before or at 60) is almost 50% larger. Copyright © 2007 John Wiley & Sons, Ltd.

Although the majority of the literature has confirmed that recessions are beneficial for adults' health and babies' outcomes at delivery, this effect should not necessarily be the same for children. In this paper, we study the effect of business cycle conditions on infant underweight, overweight, and obesity. We exploit eight waves of repeated cross-sectional data (1987-2012) of the Spanish National Health Survey for children aged 2-15 and use the regional unemployment rate of the trimester of the interview as a proxy for the business cycle phase at the local level. We find that an increase in the unemployment rate is associated with lower obesity incidence, especially for children under 6 years old and over 12 years old. However, economic shocks also proof to have potentially negative consequences as they increase the prevalence of infant underweight for the same age groups. Moreover, we show that the possible mechanisms through which the cycle is impacting infant obesity is the nutritional composition of the children's diet, as well as, increases in the frequency of exercise. We provide some evidence that suggests that the impact of business cycle conditions on infant weight disorders have little objective health consequences in the short run. However, the potential long-term effects may become important as underweight during childhood is associated with worse outcomes later in life. Copyright © 2016 John WileySons, Ltd.

This paper analyses collective bargaining using Spanish firm-level data. Central to the analysis are the joint determination of wage and strike outcomes in a dynamic framework and the possibility of separate wage equation for strike and non-strike outcomes. Conditional to strikes taking place, we confirm a negative relationship between strike duration and wage changes in a dynamic context. In this sense, the joint effect of the strike variables is positive for short strikes and negative for long ones (above 20 days). Furthermore, we find selection in wage equations induced by the strike outcome. In this sense, the possibility of wage determination processes being different in strike and non-strike samples is not rejected by the data. In particular, wage dynamics are of opposite sign in both strike and non-strike equations. Finally, we find evidence of a 0.33 percentage points wage change strike premium.

In this work we study older workers’ (50—64) labor force transitions after a health/disability shock. We find that the probability of keeping working decreases with both age and severity of the shock. Moreover, we find strong interactions between age and severity in the 50—64 age range and none in the 30–49 age range. Regarding demographics we find that being female and married reduce the probability of keeping work. On the contrary, being main breadwinner, education and skill levels increase it. Interestingly, the effect of some demographics changes its sign when we look at transitions from inactivity to work. This is the case of being married or having a working spouse. Undoubtedly, leisure complementarities should play a role in the latter case. Since the data we use contains a very detailed information on disabilities, we are able to evaluate the marginal effect of each type of disability either in the probability of keeping working or in returning back to work. Some of these results may have strong policy implications.

In this paper we examine a number of issues that arise in investigating labor force dynamics using the Spanish Labor Force Survey (EPA). These issues are by no means specific to the Spanish case and apply to most European-style labor force surveys. Our main conclusions may be summarized as follows. First, survey nonresponse cannot be neglected. Second, the EPA tends to underestimate employment and participation of high-educated young people, and to overestimate those of the low-educated elderly. Finally, we find little evidence that attrition causes important selection biases in estimating quarterly transition probabilities.

Using three waves of data from the European Community Household Panel, this paper estimates demand for physician services equations for 12 European countries. We focus on the selection of the most appropriate econometric specification for visits to general practitioners and to specialists among two-part and latent class models. The distinction between the demand of services from these two types of physicians allows us to distinguish cases in which two-part perform better than latent class models, evidence which is different from previous findings in the literature. The results suggest that latent class models are more appropriate than two-part models to estimate general practitioners utilisation while the opposite is found for visits to the specialists.

In this work we combine wage data from Social Security working histories and health information available in the Survey of Health and Retirement in Europe to explore the link between health, financial incentives and retirement in Spain. Our results show that individuals in worse health quintiles are, indeed, the more responsive to financial incentives as they prove to be less likely to retire when incentives to continue working increase.

The main purpose of minimum pension benefit programs and old-age social assistance programs is to guarantee a minimum standard of living after retirement and thus to alleviate poverty in old age. In many developing and developed countries, the minimum pension program is a key welfare program and a major influence on the retirement decisions of low-income workers and workers with erratic work histories. The design of many minimum pension programs tends to create strong incentives for low-income workers to retire as soon as they become eligible for the program, which is often earlier than the normal retirement age.

Over the last 50 years, some important reforms in European countries were aimed at improving the system of vocational studies. By contrast, the Spanish educational law (LOGSE) from 1990 moved in the opposite direction. While the LOGSE increased the number of compulsory schooling years from 8 to 10, it also eliminated vocational studies of first grade (FP-I, ages 14 to 16), thereby reducing flexibility. The LOGSE was rolled out at different times across regions within Spain. This is used as an identification strategy to analyse whether the change in law contributed to stop the declining trend in dropout rates observed in the last two decades (they declined from 70% in 1977 to 30% in 1995, but remained at roughly 30% until recent years, twice the EU27 average). Results show that the new compulsory secondary education increased dropout rates for men and decreased them for women. Alternatively, the removal of the lower vocational track had negative effect for both genders, being the effect stronger for women. Finally, by reducing the track choice opportunities for students, the reform reduced the probability of following the vocational track after completion of the compulsory stage. JEL codes I20, J24.

This article analyzes wage changes with an unbalanced panel from the Spanish Collective Bargaining in Large Firms survey. Central to the analysis are the joint determination of strike and wage outcomes and, in particular, the estimation of the slope of the wage concession curve. The author controls for the possible endogeneity of strike variables in the wage equation and suggests two sets of instruments: lagged strike outcomes or reduced-form predictions of the strike variables. When controlling for endogeneity, a negative relationship between strike duration and the size of the wage change arises. However, short strikes still produce higher wage changes. Copyright 1999 by University of Chicago Press.

This article analyses the behaviour of the Holtz-Eakin test for the presence of individual heterogeneity effects in dynamic small-T unbalanced panel data models in the presence of endogenous but predetermined regressors. The test behaves correctly for a moderate autoregressive coefficient. However, when this coefficient approaches unity, the presence of an additional regressor sharply affects both the power and the size of test. © 1998 Elsevier Science S.A.

This paper analyses the effect of unmet formal care needs on informal caregiving hours in Spain using the two waves of the Informal Support Survey (1994, 2004). Testing for double sample selection from formal care receipt and the emergence of unmet needs provides evidence that the omission of either one of these two variables would causes underestimation of the number of informal caregiving hours. After controlling for these two factors the number of hours of care increases with both the degree of dependency and unmet needs. In the presence of unmet needs, the number of informal caregiving hours increases when some formal care is received. This result refutes the substitution model and supports complementarity or task specificity between both types of care. For the same combination of formal care and unmet needs, informal caregiving hours increased between 1994 and 2004. Finally, in the model for 2004, the selection term associated with the unmet needs equation is larger than that of the formal care equation, suggesting that using the number of formal care recipients as an indicator of the goodness of the long-term care system may be confounding, if we do not complete this information with other quality indicators.

We test the hypothesis that exits from the labor market for pre-retirement individuals in Spain respond mainly to economic conditions and to incentives by analyzing two effects. First, we test the existence of spillover effects from a reform of the old-age pension system on transitions from employment to disability, unemployment and inactivity. We exploit the fact that the reform only affected individuals that had contributed between 15 and 25 years to the Social Security. Second, we estimate the effect of business cycle (BC) conditions at the local, sector and national level on these transitions. We find that both factors affect the exit timing and the choice of route out of the labor market. JEL classification: J21, J22, R23 Financial help from projects ECO2008-06395-C05-01 and ECO2011-30323-C03-02 is gratefully acknowledged. Vall Castello also thanks the financial help received from the Centre Cournot for Economic Research

The provision of informal care is an important source of long-term care for older people in Europe. According to the latest available data, between 21% and 43% of the population living in Europe aged 65 and older receive informal care. Given fiscal constraints on public budgets in most of the EU countries and the ageing of the population, it is likely that in the very near future informal care providers will represent the most important source of care for disabled and older people in Europe. This Policy Brief, drawing on the findings of Work Package 3 on Availability and Choice of Care of the ANCIEN project, attempts to analyze the principal determinants of both providing and receiving informal long-term care with a view to designing adequate policies to support caregivers in a sustainable and efficient way.

Unemployment rates in developed countries have recently reached levels not seen in a generation, and workers of all ages are facing increasing probabilities of losing their jobs and considerable losses in accumulated assets. These events likely increase the reliance that most older workers will have on public social insurance programs, exactly at a time that public finances are suffering from a large drop in contributions. Our paper explicitly accounts for employment uncertainty and unexpected wealth shocks, something that has been relatively overlooked in the literature, but that has grown in importance in recent years. Using administrative and household level data we empirically characterize a life-cycle model of retirement and claiming decisions in terms of the employment, wage, health, and mortality uncertainty faced by individuals. Our benchmark model explains with great accuracy the strikingly high proportion of individuals who claim benefits exactly at the Early Retirement Age, while still explaining the increased claiming hazard at the Normal Retirement Age. We also discuss some policy experiments and their interplay with employment uncertainty. Additionally, we analyze the effects of negative wealth shocks on the labor supply and claiming decisions of older Americans. Our results can explain why early claiming has remained very high in the last years even as the early retirement penalties have increased substantially compared with previous periods, and why labor force participation has remained quite high for older workers even in the midst of the worse employment crisis in decades.

In this paper we analyze the trends in labor force participation and transitions to benefit programs of older workers in relation to health trends as well as recent Social Security reforms. Our preliminary conclusions are pessimistic regarding the effect of health improvements on the labor market attachment of older workers since we show that despite the large improvements in the mortality rates among older individuals in Spain, the employment rates of individuals older than fifty-five remain lower than the ones observed in the late 1970s. Some caution should remain in our conclusions as the evidence on health trends is inconclusive. Regarding the effect of Social Security reforms, we find that both the 1997 and the 2002 reform decreased the stock into old-age benefits at the cost of an increased share of the participation into disability. Finally, we find that there was a significant increase in the outflow from employment into disability after the 2002 reform.

Multimarket contact theory predicts that firms will optimally reduce prices in markets where collusive prices are sustainable and allocate the slack of the corresponding incentive compatibility to increase prices in markets where collusion is not sustainable. Binding price caps in collusive markets will have different effects over the multimarket contact mechanism depending on the severity of the cap. Setting a price cap close to the unregulated case will increase the size of the redistribution of market power whereas stronger regulation will even reduce prices in unregulated markets. Therefore, price regulations aiming at capping prices in a specific market will also affect markets that are not subject to specific mandatory price regulations. We find evidence of the theory predictions using information for nine OECD countries for pharmaceutical markets. Unregulated US markets are shown to respond to the redistribution effect; Canadian markets, known to be subject to soft price regulations, with respect to the former, are shown to be consistent with a stronger redistribution effect. EU markets and Japan are either consistent with the effect of a medium regulation or strong regulation. In this last case multimarket contact cannot explain prices, and these are expected to be lower compared to the unregulated benchmark.

Objetivo En este trabajo se estudia la relación entre cuidados personales formales e informales para la población dependiente en un conjunto de países europeos. Métodos Se utilizan datos del Survey of Health, Ageing and Retirement in Europe (2004), y se estima un modelo probit bivariado. A diferencia de otros estudios, no sólo se tienen en cuenta características sociodemográficas, de salud y del entorno del receptor de los cuidados, sino que también se consideran las características institucionales de los sistemas de cuidados de largo plazo. Resultados Se obtiene una correlación positiva y significativa entre ambas decisiones, es decir, condicional a recibir cuidados; hay una cierta preferencia por la combinación de ambos tipos de cuidados. Los resultados muestran la relevancia de las variables de salud y del régimen de convivencia a la hora de definir la combinación de cuidados formales e informales. Hay diferencias importantes en la probabilidad de utilización de ambos tipos de cuidados entre países europeos, y destaca la relevancia de los cuidados informales en España. Conclusiones El diseño de políticas de cuidados de largo plazo debe tener en consideración que la probabilidad de recibir cuidados formales o informales aumenta más en los países donde hay obligación legal de atender a familiares dependientes o con una mayor tasa de institucionalización. Por tanto, la combinación de diferentes servicios formales, más que la implementación de prestaciones económicas para el cuidador, debiera considerarse como alternativa posible para controlar el gasto público y aumentar la satisfacción de los cuidadores. Objective To study the relationship between formal and informal care for the dependent population in a number of European countries. Method Data from the Survey of Health, Aging and Retirement in Europe for 2004 were used and a bivariate probit model was estimated. Unlike other studies, the present analysis includes the institutional features of the various long-term care systems, in addition to the demographic, health and environmental characteristics of the individual receiving care. Results A significant correlation was found between the two options, which reveals that, conditional on receiving care, there was a preference for the combination of both types of care. The results show the importance of health status and living arrangements for defining the combination of formal and informal care. There were substantial differences in the likelihood of the two types of care among European countries. A notable finding was the importance of informal care in Spain in comparison with other countries. Conclusions The probability of receiving formal or informal care is higher in countries where families have a legal obligation to look after dependent relatives and where institutionalization rates are higher. This finding should be considered in the design of long-term care policies. Therefore, to control growth of public expenditure and, at the same time, improve caregiver satisfaction, policies that combine distinct formal services should be promoted over the implementation of care allowances. P. García-Gómez agradece el apoyo económico de la Unión Europea a través de Marie Curie Intra-European Fellowships. S. Jiménez-Martín y C. Vilaplana agradecen el apoyo del Ministerio de Educación y Ciencia, proyecto ECO-2008-06395-C05-01.

In this paper we analyze the sensitivity of the labour market decisions of workers close to retirement with respect to the incentives created by public regulations. We improve upon the extensive prior literature on the effect of pension incentives on retirement in two ways. First, by modeling the transitions between employment, unemployment and retirement in a simultaneous manner, paying special attention to the transition from unemployment to retirement (which is particularly important in Spain). Second, by considering the influence of unobserved heterogeneity in the estimation of the effect of our (carefully constructed) incentive variables. Using administrative data, we find that, when properly defined, economic incentives have a strong impact on labour market decisions in Spain. Unemployment regulations are shown to be particularly influential for retirement behaviour, along with the more traditional determinants linked to the pension system. Pension variables also have a major bearing on both workers’ reemployment decisions and on the strategic actions of employers. The quantitative impact of the incentives, however, is greatly affected by the existence of unobserved heterogeneity among workers. Its omission leads to sizable biases in the assessment of the sensitivity to economic incentives, a finding that has clear consequences for the credibility of any model-based policy analysis. We confirm the importance of this potential problem in one especially interesting instance: the reform of early retirement provisions undertaken in Spain in 2002. We use a difference-in-difference approach to measure the behavioural reaction to this change, finding a large overestimation when unobserved heterogeneity is not taken into account.

In this paper we analyze the trends in labor force participation and transitions to benefit programs of older workers in relation to health trends as well as recent Social Security reforms. Our preliminary conclusions are pessimistic regarding the effect of health improvements on the labor market attachment of older workers since we show that despite the large improvements in the mortality rates among older individuals in Spain, the employment rates of individuals older than fifty-five remain lower than the ones observed in the late 1970s. Some caution should remain in our conclusions as the evidence on health trends is inconclusive. Regarding the effect of Social Security reforms, we find that both the 1997 and the 2002 reform decreased the stock into old-age benefits at the cost of an increased share of the participation into disability. Finally, we find that there was a significant increase in the outflow from employment into disability after the 2002 reform.

The remarkable growth of older population has moved long term care to the front ranks of the social policy agenda. Understanding the factors that determine the type and amount of formal care is important for predicting use in the future and developing long-term policy. In this context we jointly analyze the choice of care (formal, informal, both together or none) as well as the number of hours of care received. Given that the number of hours of care is not independent of the type of care received, we estimate, for the first time in this area of research, a sample selection model with the particularity that the first step is a multinomial logit model. With regard to the debate about complementarity or substitutability between formal and informal care, our results indicate that formal care acts as a reinforcement of the family care in certain cases: for very old care receivers, in those cases in which the individual has multiple disabilities, when many care hours are provided, and in case of mental illness and/or dementia. There exist substantial differences in long term care addressed to younger and older dependent people and dependent women are in risk of becoming more vulnerable to the shortage of informal caregivers in the future. Finally, we have documented that there are great disparities in the availability of public social care across regions.

This paper presents and estimates a dynamic choice model in the attribute space considering rational consumers. In light of the evidence of several state-dependence patterns, the standard attribute-based model is extended by considering a general utility function where pure inertia and pure variety-seeking behaviors can be explained in the model as particular linear cases. The dynamics of the model are fully characterized by standard dynamic programming techniques. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer shifts among varied products. We run some simulations to analyze the consumption paths out of the steady state. Under the hybrid utility assumption, the consumer behaves inertially among the unfamiliar brands for several periods, eventually switching to a variety-seeking behavior when the stationary levels are approached. An empirical analysis is run using scanner databases for three different product categories: fabric softener, saltine cracker, and catsup. Non-linear specifications provide the best fit of the data, as hybrid functional forms are found in all the product categories for most attributes and segments. These results reveal the statistical superiority of the non-linear structure and confirm the gradual trend to seek variety as the level of familiarity with the purchased items increases.

This paper studies price determination in pharmaceutical markets using data for 25 countries, six years and a comprehensive list of products from the MIDAS IMS database. We show that market power and the quality of the product has a significantly positive impact of prices. The nationality of the producer appears to have a small and often insignificant impact on prices, which suggests that countries which regulates prices have relatively little power to do it in a way that advances narrow national interest. We produce a theoretical explanation for this phenomenon based on the fact that low negotiated prices in a country would have a knock-on effect in other markets, and is thus strongly resisted by producers. Another key finding is that the U.S. has prices that are not significantly higher than those of countries with similar income levels. This, together with the former observation on the effect of the nationality of producers casts doubt on the ability of countries to pursue “free-riding" regulation.

We analyze the effect of multimarket contact on the pricing behavior of pharmaceutical firms controlling for different levels of regulatory constraints using the IMS MIDAS database for the industry. Theoretically, under product differentiation, firms may find it profitable to allocate their market power among markets where they are operating, specifically from more collusive to more competitive ones. We present evidence for nine OECD countries suggesting the existence of a multimarket effect for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), while the results are more unstable for highly regulated countries with some countries being consistent with the theory (France) while others contradicting it (Japan, Italy and Spain). A key result indicates that in the latter countries, price constraints are so intense, that there is little room for allocating market power. Thus equilibrium prices are expected in general to be lower in regulated countries.