Javier Olivera

Chapter 23 - The Welfare State and Antipoverty Policy in Rich Countries

Abstract The aim of this chapter is to highlight some key aspects of recent economic research on the welfare state and antipoverty policy in rich countries and to explore their implications. We begin with the conceptualization and measurement of poverty before sketching out some core features and approaches to the welfare state and antipoverty policies. We then focus on the central plank of the modern welfare states efforts to address poverty—namely, social protection, discussing in turn the inactive working-age population, child income support, in-work poverty, and retirement and old-age pensions. After that we discuss social spending other than cash transfers, the labor market, education, training and activation, and, finally, intergenerational transmission, childhood, and neighborhoods. We also discuss the welfare state and antipoverty policy in the context of the economic crisis that began in 2007–2008 and the implications for strategies aimed at combining economic growth and employment with making serious inroads into poverty. We conclude with directions for future research.

Successful ageing and multi-dimensional poverty: the case of Peru

ABSTRACT This study investigated the determinants of Successful Ageing (SA) in a sample of 4,151 Peruvians aged between 65 and 80 years and living in poverty. A key contribution of this study is to combine the conceptual appeal of SA to measure wellbeing in old age with the multi-dimensional poverty counting approach developed in the economic literature. This setting allows for moving beyond the dichotomy of successful and usual ageing to take advantage of the full distribution of success along a set of dimensions of wellbeing. The data are drawn from the Encuesta de Salud y Bienestar del Adulto Mayor (ESBAM) survey, which is the baseline to evaluate the non-contributory public pension programme Pension 65. Nine indicators of SA have been used to assess the dimensions of physical health, functioning, cognition, emotional health and life satisfaction. The variables associated with a higher number of satisfied indicators were male gender, younger old age, literate, employed, low food insecurity, good nutritional status, normal blood pressure, absence of disabilities, non-smoker, empowerment, good self-esteem, absence of mental disability and less frequent contact with a social network. From a policy perspective, the results of this study report a remarkably stable effect of three variables affecting SA that can be relatively easy to measure, monitor and influence by public intervention. These variables are food security, nutrition quality and self-esteem.

Voluntary affiliation to Peru's individual accounts pension system

One important aspect in the design of social protection is coverage. In Peru, as in most Latin American countries, social security coverage is mandatory only for workers in the formal sector. This article investigates the determinants of voluntary affiliation to Perus individual accounts pension system. It is found that married males with more than high-school level education living in high income households and with other family members already affiliated to the individual accounts pension system have a higher likelihood of voluntary affiliation. Although the results suggest that family-based safety nets might be substitutes for voluntary participation in the individual accounts pension system, nonetheless, extending pension coverage and addressing poverty remain as challenges for government involvement.

Mental Retirement and Non-Contributory Pensions for the Elderly Poor in Peru

This paper analyses the effects of retirement on cognitive abilities for the elderly poor on the basis of the “mental retirement” effect that accompanies retirement. Given the recent emergence and expansion of non-contributory pension programs to alleviate poverty in old-age across low and middle income countries, attention should be given to the potential acceleration of cognitive decline when individuals retire, i.e. when there is a decrease in their engagement of cognitive demanding activities. We use a unique and recent survey of the elderly poor in Peru (ESBAM), which includes a cognitive test and serves as the baseline for a non-contributory pension program. We find a significant negative effect of retirement on cognitive ability after controlling for a number of demographics and objective health measures and even after dealing with the potential endogeneity of retirement.

A Cross-country and Cohort Analysis of Active Ageing Differences Among the Elderly in Europe

This chapter studies the differences in active ageing across cohorts and countries in Europe. This is done with the replication of the Active Ageing Index for cohorts formed by age group, sex and country for 2012. The analysis is performed with different model regressions at the cohort level and introducing macro variables at the country level. In general, there is a gap in active ageing in detriment of females which is larger in older cohorts. Further, wealth, equity and pension settings of the country are important predictors for better active ageing. Finally, in line with the original AAI results, it is found that the Social-Democratic welfare regime (Nordic countries), with its set of strong redistributive policies, is the most favourable setting for active ageing.

The Role of Nutrition and Literacy on the Cognitive Functioning of Elderly Poor Individuals

ABSTRACT Maintaining cognitive function is a prerequisite of living independently, which is a highly valued component in older individuals’ well-being. In this article we assess the role of early-life and later-life nutritional status, education, and literacy on the cognitive functioning of older adults living in poverty in Peru. We exploit the baseline sample of the Peruvian noncontributory pension program Pension 65 and find that current nutritional status and literacy are strongly associated with cognitive functioning for poor older adults. In a context of rising popularity of noncontributory pension programs around the world, our study intends to contribute to the discussion of designing accompanying measures to the pension transfer, such as adult literacy programs and monitoring of adequate nutrition of older adults.

The Division of Inter-Vivos Parental Transfers in Europe

This paper explores the patterns of the division of inter-vivos financial transfers from old parents to adult children in a sample of 14 European countries drawn from two waves of the Survey of Health, Aging, and Retirement in Europe. Contrary to previous research mostly focused in US, this study finds a higher frequency of parents that equally divide their financial transfers among their adult children. On average, 36% of European parents divide equally. These results sharply contrast with approximately 6.4%-9.2% of American parents that divide equally. It is possible that altruistic parents are also concerned with a norm of equal division, and therefore they do not fully offset the differences of income among their children as predicted by the standard model of altruism. The econometric results show that parents are more likely to give equal transfers if, in their view, income inequality among their children is not too high. Furthermore, the analysis is extended by adding variables at the country level. In this regard, income inequality, pension expenditures, the societal level of altruism and inheritance taxes are key to explain country differences.