Social and Economic Dimensions of an Aging Population


Vol. 5 No. 1

Spring 2003

SEDAP (Social and Economic Dimensions of an Aging Population) is a multidisciplinary research program studying a wide range of aging-related issues and is funded by the Social Sciences and Humanities Research Council of Canada. SEDAP is centred at McMaster University and involves researchers from that institution as well as from the University of British Columbia, Université de Montréal, Queen's and the University of Toronto.


I. Upcoming SEDAP Conference

SEDAP will be hosting a conference on April 10-11, 2003, entitled "Moving Towards an Older Society". The conference will be held at McMaster University, Hamilton, Ontario. Speakers will include:

For further information, please contact the McMaster Centre for Gerontological Studies, email: or see the SEDAP website. Pre-registration for the conference is required for all attendees.

II. SEDAP Research Papers

SEDAP Research Papers are available on the SEDAP website at no cost. Paper copies may be obtained for a nominal charge. Please contact Mrs. Gail Kalika, Department of Economics, KTH-426, McMaster University, Hamilton, Ont., Canada, L8S 4M4.

Brief descriptions follow of the most recently released papers in the SEDAP series.

SEDAP Research Paper No. 89:

The Wealth and Asset Holdings of U.S.-Born and Foreign-Born Households: Evidence from SIPP Data

Deborah A. Cobb-Clark (Research School of Social Sciences, Australian National University) and Vincent Hildebrand (Department of Economics, York University)

The extent to which immigants can successfully participate in the economic, social and political life of the host country is an increasingly important issue as the number of individuals living outside their country of birth continues to grow worldwide. Little attempt has been made, however, to examine how the relative wealth position of foreign-born individuals varies over the settlement process. This paper seeks to fill this gap by comparing the net worth and portfolio choices of native-born and foreign-born individuals in the United States.

The data set used is the Survey of Income Program Participation (SIPP), specifically the 1987, 1990, 1991, 1992, 1993 and 1996 surveys. The authors note that SIPP wealth data do not cover any future pension rights nor do the data necessarily include any information on assets held off-shore (although these are not explicitly excluded). The authors' sample includes both couple- and single- headed native and immigrant households in which the reference person is between 25 and 75 years old. A married immigrant household is defined as a household in which both partners are born outside of the U.S. to non-U.S. parents. The resulting sample contains 83,294 U.S.-born households (including 35,372 single- headed households) and 6779 immigrant households (including 2748 single-headed households).

The authors find that foreign-born households are less wealthy than U.S.-born households. The median wealth level of U.S.-born couples is 2.3 times the median wealth level of foreign-born couples, placing the median foreign-born couple between the 30th and 35th percentile of the native-born wealth distribution. Among singles, the median wealth level of the U.S. -born is three times that of the foreign-born, leaving immigrants in the 35th to 40th percentile of the native wealth distribution. Furthermore, there is a great deal of diversity in wealth levels and asset portfolios within the immigrant population, suggesting a very uneven process of economic and social integration. The authors find that the year in which an immigrant entered the U.S. is closely related to portfolio choices, with established immigrants holding significantly less and recent immigrants holding significantly more financial wealth. The opposite pattern is found with respect to real estate equity.

SEDAP Research Paper No. 90:

Population Aging, Productivity, and Growth in Living Standards

William Scarth (Department of Economics, McMaster)

This paper summarizes several approaches used by economists to analyze how an aging population might affect the growth rate of per capita consumption. The author examines in turn how an aging population affects society's incentive to invest in capital stock, the role played by the level of foreign indebtedness in an open economy such as Canada, and the effect of aging on investment in education (human capital).

Simulation results from the simple model economies presented here lead to a fairly robust general conclusion. It appears that the aging population will probably lead to only rather modest changes in the growth rate of Canadian living standards, and that the net effect could even be a favourable one.

SEDAP Research Paper No. 91:

A Life-course Perspective on the Relationship between Socio-economic Status and Health: Testing the Divergence Hypothesis

Steven G. Prus (Department of Sociology and Anthropology, Carleton University)

The divergence theory (also called the cumulative advantage/disadvantage hypothesis or the "Matthew" effect) predicts that the health status of individuals with early socio-economic advantages generally deteriorates more slowly relative to their socio- economically disadvantaged counterparts. The author notes that it is not possible to test this theory with the cross-sectional data used here. Thus he examines more generally the relationship of age, health and socio-economic status among adult Canadians with view to providing a primary step toward understanding such a relationship.

The data used are from the public-use version of the 1994-95 National Population Health Survey. The sample group for Prus's study are persons aged 25-79 (as age is topcoded at 80 years and over), giving a sample size of 13,531. Number of years of formal education (relative to one's cohort group) and household annual income are used to measure socio-economic status. Other variables included in the analysis are two different measures of health status, age, gender and marital status.

Prus finds that age has a negative and significant effect on health status. He also finds that education and income have a positive and signficant influence on health. Finally, the combined effect of age and education (i.e., the age*education interaction term) is positive and significant for health status.

SEDAP Research Paper No. 92:

Immigrant Mental Health and Unemployment

Steven Kennedy (Australian Treasury, Canberra, ACT)

This paper explores whether the stresses associated with the transition to a new country combined with additional stress arising from unemployment affects the mental health of immigrants to Australia. An important aspect of the paper is that the longitudinal data set on which the analysis is based allows for an examination of the issue of causality.

The data used here are from the Longitudinal Survey of Immigrants to Australia (LSIA), which was designed to be representative of the immigrant population arriving in Australia between September 1993 and August 1995. The survey was administered in March of 1994, 1995 and 1997 and included a health questionnaire. The LSIA also includes information on age, gender, marital status, education level, visa category and employment activity.

The author finds that the general immigrant population goes through some adjustment process after arriving in Australia, with psychological disadvantage higher at 6 months after immigration than after 18 months and after 42 months. Unemployment is found to have a significant negative effect on the mental health of immigrants, with the causality found to run from labour force status to mental health, rather than vice versa. Other variables associated with poor mental health among immigrants include marital status - separated, the humanitarian visa category, low household income and poor English language skills. The paper concludes by noting that policies that restrict immigrant access to labour market programs may not only lead to counter-productive health outcomes for immigrants but may have health care cost implications for society as a whole.

SEDAP Research Paper No. 93:

The Relationship between Education and Health in Australia and Canada

Steven Kennedy (Australian Treasury, Canberra, ACT)

In order to frame effective health policy, it is important to determine not only if there is an association between education and health but also if there is a positive causal relationship. If there is a causal relationship, public health policy makers need to consider the effects of education policy when forming optimal health policy.

This paper considers several theories for why education causes health. One theory, technical efficiency, suggests that additional education increases an individual's ability to "produce" health, given a set of inputs. A related explanation is allocative efficiency: here additional education improves an individual's ability to make the best choice of inputs with which to produce health. Another interpretation of the empirical relationship between health and education is that individuals who invest relatively more in schooling will also invest more in health, a time preference effect. In this case, there is no direct effect of education on health, but instead there is a third variable, such as time preference, to which both education and health are related.

The author uses data from the Australian Bureau of Statistics 1995 National Health Survey and the 1995 National Population Health Survey from Statistics Canada. Both data sets contain a self- assessed health status variable. Descriptive statistics for the two data sets show that Canadian self-assessed health status is slightly higher than that reported for Australia while there are also more individuals with higher educational qualifications in the Canadian data set. The patterns of responses are similar in both countries, with those with higher educational qualifications reporting better health status.

Testing the technical and allocative efficiency theories, the author is able to show that the association of health to other important socio- economic variables does vary by education group, and this may imply that the underlying health production structure varies by education or that education groups interpret relative prices of inputs differently. Using smoking status as a time preference indicator, the author finds that there is at least some time preference component in the education and health relationship.

SEDAP Research Paper No. 94:

The Transition from Good to Poor Health: An Econometric Study of the Older Population

Neil J. Buckley, Frank T. Denton, A. Leslie Robb and Byron G. Spencer (Department of Economics, McMaster)

It is well known that morbidity and mortality rates increase with age at older ages and that health outcomes differ systematically with socioeconomic status (SES). Those with higher incomes and higher status occupations tend to live longer and in better health but why that should be so is not clear. Do people enjoy better health and longer lives because they are in higher SES groups or is the reverse true, that they are in higher SES groups because of a predisposition to good health?

The authors of this paper use Statistics Canada's Survey of Labour and Income Dynamics (SLID), a longitudinal household survey in this research. To avoid the problem of the endogeneity of income in a health-on-income regression model, the analysis is restricted to individuals 50 years of age or older who are in good health in the initial year of the sequence of panel observations. The authors then model the change or constancy of the reported health state in subsequent years as a function of the initial-year income level and the individual's age, education and other variables, also defined as of the initial year.

In general, their models account for about 8 percent of the variation of the health transition probabilities; thus some 92 percent of the variation is left to be accounted for by unobservable individual characteristics such as individual genetic differences, change exposure to communicable diseases, or accidents. The effect of relative income in the model is substantial. Both men and women in the highest income quartile are about 0.07 more likely to remain in good health than are those in the lowest quartile, after taking account of the effects of education, age and other influences. Higher income individuals are likely also to be in the higher education categories, and the authors find that the combined effects of relative income and education are perhaps the best measure of the influence of socioeconomic status on health.

editor: Deb Fretz -
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Last revised: Mar 31, 2003.