. "5 Facilitating Longer Working Lives: The Need, the Rationale, the How--David A. Wise." Aging in Asia: Findings from New and Emerging Data Initiatives. Washington, DC: The National Academies Press, 2012.
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Aging in Asia: Findings from New and Emerging Data Initiatives
the proportion of old to young is increasing. As the number of older people increases, health care costs will rise, both because of the increase in the number of older people but also because advancing technology will likely create better and perhaps more expensive health care treatments. The cost of public pension (social security) programs will also rise, but with a smaller proportion of the population in the labor force to pay for these increasing social security and health care costs. The problem has been magnified by the departure of workers from the labor force at younger ages along with substantial increases in the number of years they spend in retirement. Thus the theme above: Some of the bounty of longer lives must be allocated to prolonging the labor force participation of older workers. It will not be feasible to use all of the increase in longevity to increase years in retirement, a theme also emphasized in Wise (2010). This is the need.
Although not discussed further in this paper, the theme is based on three working assumptions. First, the increase in the labor force participation of older people will increase production and gross domestic product (GDP). Second, the increase in production will increase tax revenues. Third, the increase in tax revenues will increase the funds available to pay for increasing social security and health care costs. In addition, the increase in labor force participation at older ages would likely increase personal saving. In the United States, with the conversion from defined benefits to a personal account system based largely on 401(k) plans, this increase would happen essentially by default. Increased personal saving would be drawn down over fewer retirement years and, thus, would increase resources in each year of retirement.
Many of the conclusions reported in this paper are based on results obtained in the International Social Security Project. Researchers who have participated in this project are listed in Box 5-1.
To emphasize the theme of population aging in Asia, wherever possible I have compared labor force and mortality trends in the participating countries with trends in China. Japan, another Asian country, is a key participant of the International Social Security Project.
The paper is in three sections. The first section, which is the primary emphasis, considers the rationale for considering longer working lives in the face of the demographic trends. In particular, I emphasize healthier older populations. I note the reduction in mortality is a marker of better health, not because it is equivalent to reductions in morbidity or to other measures of health status, but because it is an indicator of health that is comparable across countries and comparable over time within the same country. I discuss the relationship between labor force participation and health and how it has changed over time. I then emphasize the relationship between mortality and self-assessed health and point to measures of the capacity to work, based on analysis by Cutler, Meara, and Richards-Shubik