Copyright (c) 2009 University of Pennsylvania All rights reserved. http://repository.upenn.edu/parc_working_papers Recent documents in PARC Working Papers en-us Wed, 07 Oct 2009 18:43:04 PDT 3600 http://repository.upenn.edu/parc_working_papers/27 http://repository.upenn.edu/parc_working_papers/27 Tue, 06 Oct 2009 11:37:33 PDT As the baby-boom population ages, adults are expected to take greater responsibility and control of their financial situation, but often are not equipped to assume that responsibility. This lack of control of one‟s finances exposes individuals to financial risk, potentially resulting in a reduced standard of living in retirement. This study explores the relationship between the personal attributes of older adults and their financial well-being, measured as financial satisfaction, while focusing on the mediating effects of control beliefs, defined as general sense of control and domain-specific levels of control related to work, health, and finances.Responses from two components of the Health and Retirement Study (HRS), the core survey and a psychosocial leave-behind questionnaire (LBQ) administered in 2006, were merged and used to test a mediation model. Using a series of regression analyses and a sample of approximately 7400 adults, aged 51 and greater, the findings provide some support of the four hypothesized models. The results of this study indicate that general sense of control and domain-specific control beliefs have a comparable influence on the relationship between personal attributes and the financial satisfaction of the older adult population. Karen A. Zurlo http://repository.upenn.edu/parc_working_papers/26 http://repository.upenn.edu/parc_working_papers/26 Tue, 01 Sep 2009 08:28:43 PDT One of the most interesting features of the Chilean pension system is that approximately two-thirds of all retirees purchase annuities, resulting in annuitization rates much higher than in other countries. In this paper we review recent developments in the payout market for Chilean pensions, focusing particularly on the role of annuities, and we discuss what makes the payout market in Chile so different from those in other nations. Olivia S. Mitchell http://repository.upenn.edu/parc_working_papers/25 http://repository.upenn.edu/parc_working_papers/25 Tue, 18 Aug 2009 12:30:34 PDT This paper develops a consumption and portfolio-choice model of a retiree who allocates wealth in four asset classes: a riskless bond, a risky asset, a real annuity, and housing. The retiree chooses health expenditure endogenously in response to stochastic depreciation of health. The model is calibrated to explain the joint dynamics of health expenditure, health, and asset allocation for retirees in the Health and Retirement Study, aged 65 and older. The calibrated model is used to assess the welfare gain from private annuitization. The welfare gain ranges from 13 percent of wealth at age 65 for those in worst health, to 18 percent for those in best health. Motohiro Yogo http://repository.upenn.edu/parc_working_papers/23 http://repository.upenn.edu/parc_working_papers/23 Tue, 09 Dec 2008 08:12:22 PST This study evaluates the effect of Chile's pension system rules and regulations on individuals' contribution and working decisions. In 1980 Chile was the first country to switch from a pay-as-you-go system to a privatized system based on individual investment accounts; then it has since been a model for pension reforms in many other Latin American countries. The Chilean system has also been considered by U.S. policy makers as a possible prototype for reform. This paper develops and estimates a dynamic behavioral model of individual decision-making about formal or informal sector employment and about pension contributions, accounting for regulations that govern the timing and level of pension benefits. Model parameters are obtained by the method of simulated maximum likelihood applied to longitudinal data from a new household survey, the Social Protection Survey (2002 to 2004), and administrative data from the pension regulatory agency. The estimated model is used to simulate the impact on employment and contribution patterns of changing the system rules. Reducing the number of quarters required to obtain the Minimum Pension and increasing the size of that pension increases work in the formal sector and contributions in the informal sector. Viviana Vélez-Grajales http://repository.upenn.edu/parc_working_papers/22 http://repository.upenn.edu/parc_working_papers/22 Wed, 08 Oct 2008 08:31:15 PDT Many HIV testing programs in Africa and elsewhere aim to reduce risk-taking behaviors by providing individuals with information about their own HIV status. This paper examines how beliefs about own HIV status affect risky sexual behavior using data from married couples living in three regions of Malawi. Risky behavior is measured as the propensity to engage in extramarital affairs or to not use condoms. The empirical analysis is based on two panel surveys for years 2004 and 2006 from the Malawi Diffusion and Ideational Change Project (MDICP) and from an experimental HIV testing intervention carried out in 2004 that provided randomized incentives for picking up test results. Most individuals participating in the MDICP testing learned that they were HIV negative and a small fraction that they were positive. Controlling for potential endogeneity between beliefs and risk-taking, we find that downward revisions in the subjective belief of being HIV positive lead to decreases in the propensity to engage in extra-marital affairs but have no effect on condom use. These results are generally supported by survey questions that directly elicited from respondents how participating in testing altered their behavior. We show that the estimates provide a lower bound in the presence of measurement error in extra-marital affairs. Aureo de Paula http://repository.upenn.edu/parc_working_papers/21 http://repository.upenn.edu/parc_working_papers/21 Fri, 12 Sep 2008 11:31:26 PDT This paper studies the effects of school vouchers in Chile, which adopted a nationwide school voucher program 28 years ago. Chile has a relatively unregulated, decentralized, competitive market in primary and secondary education and therefore provides a unique setting in which to study how voucher programs affect school choice as well as educational attainment and labor market outcomes. This paper develops and estimates a dynamic model of schooling and work decisions using data from the 2002 Historia Laboral y Seguridad Social and the 2004 Enquesta Proteccion Social (EPS) surveys. The dataset includes rich demographic information as well as contemporaneous and retrospective schooling and work information covering a thirty-five year time frame. Some individuals in the sample completed their schooling before the voucher program was introduced, while others had the option of using the vouchers over part or all of their schooling careers. The impacts of the voucher program are identified from the differences in the schooling and work choices made and wage returns received by individuals differentially exposed to the program. Simulations based on the estimated dynamic model indicate that the school voucher program induced individuals affected by the program to attend private subsidized schools at a higher rate, achieve higher educational attainment, receive higher wages and participate more in the labor force. Returns to both public and private education increased after the introduction of vouchers. An examination of distributional effects shows that the voucher program benefitted individuals from both poor and non-poor backgrounds, but that the non-poor experienced greater benefits. David Bravo http://repository.upenn.edu/parc_working_papers/20 http://repository.upenn.edu/parc_working_papers/20 Wed, 03 Sep 2008 07:48:18 PDT This study examines the relationship between early childhood morbidity and young adult health in a poor developing country with a high prevalence of childhood diseases. I take advantage of the rich observational data collected by the Institute of Nutrition of Central America and Panama (INCAP) Longitudinal Study in Guatemala to estimate the effects of five types of childhood illnesses on metabolic syndrome in young adulthood, a predictor of cardiovascular disease and type 2 diabetes. This analysis supports the hypothesis that poor health in childhood is associated with a higher probability of metabolic syndrome in young adulthood. I also find that adult height, often used as a proxy for childhood conditions, does not capture the effects of childhood morbidity. Thus, studies that include height but no direct measure of childhood morbidity are likely to underestimate the effects of child health on later life outcomes. The results highlight the significance of child health programs that can improve population health over the life course. Rachel Margolis http://repository.upenn.edu/parc_working_papers/19 http://repository.upenn.edu/parc_working_papers/19 Wed, 20 Aug 2008 12:15:07 PDT The introduction of lifecycle funds into 401(k) plans offers a rich environment in which to assess workers' portfolio allocation decisions. Consistent with behavioral models, employer design decisions strongly influence lifecycle adoption behavior while fundamentally altering portfolio characteristics, both in the cross-section and longitudinally. Yet there are also elements of rational choice by new employees, as well as choice constrained by information costs among workers with low literacy characteristics. We conclude that recent legislation encouraging riskier 401(k) portfolios will modify investment patterns, with the rate of change varying according to whether behavioral or rational elements dominate in a given setting. Olivia S. Mitchell http://repository.upenn.edu/parc_working_papers/18 http://repository.upenn.edu/parc_working_papers/18 Tue, 05 Aug 2008 10:22:08 PDT Few studies of educational barriers in developing countries have investigated the role of children's vision problems, despite the self-evident challenge that poor vision poses to classroom learning and the potential for a simple ameliorative intervention. We address this gap with an analysis of two datasets from Gansu Province, a highly impoverished province in northwest China. One dataset is the Gansu Survey of Children and Families (GSCF, 2000 and 2004), a panel survey of 2,000 children in 100 rural villages; the other is the Gansu Vision Intervention Project (GVIP, 2004), a randomized trial involving 19,185 students in 165 schools in two counties. Results attest to significant unmet need for vision correction. About 11 percent of third to fifth graders in the GVIP and about 17 percent of 13 to 16 year olds in the GSCF had diagnosed vision problems. Yet, just 1 percent of the GVIP sample and 7 percent of the GSCF sample wore glasses in 2004, and access to vision correction shows a sharp socioeconomic gradient in both datasets. Importantly, vision problems themselves are actually selective of higher socioeconomic status children and more academically engaged students, a finding that poses challenges to isolating the causal impact of glasses-wearing. Propensity score matching estimates based on the GSCF suggest a significant effect of glasses-wearing on standardized math and literacy tests, though not on language tests. Analysis of the GVIP intervention shows that those who received glasses were less likely to fail a class. While we cannot firmly rule out all sources of selectivity, findings are consistent with the commonsense notion that correcting vision supports learning.The high level of unmet need for vision correction, together with evidence suggesting that wearing glasses supports learning, indicates the potential value of this simple intervention for students in developing country settings. The selectivity issues involved in the analysis indicate the need for further empirical studies that test the impact of vision correction on learning. Emily Hannum http://repository.upenn.edu/parc_working_papers/17 http://repository.upenn.edu/parc_working_papers/17 Tue, 05 Aug 2008 10:14:55 PDT Utilizing the 5% Public Use Micro Data Sample (PUMS) from the 2000 Census of Population and 2000-2006 waves of the National Health Interview Survey (NHIS), we examine differences in disability, self-rated health and chronic conditions among native-born and foreign-born black US residents. Among the foreign-born, we distinguish among immigrants from the Caribbean /West Indies, Africa, Europe and other regions of the world, as well as by Hispanic origin. Results from both data sets point to an immigrant health advantage across all measures of health for all groups except for the European-born. Black immigrants from Europe reported similar levels of hypertension as U.S.-born non-Hispanic blacks. Our results also suggest that the Hispanic health "paradox" does not apply to Hispanics who self-identify as black. Irma Elo