Asian Development Review

We pursue a cross-country comparison of relative financial readiness of older households in Japan and the Republic of Korea relative to the United States. Our comparative analysis, using macro-level and harmonized longitudinal household financial data, covers the principal financial channels of old-age support: public and private pension plans, family support, and self-management of private financial portfolios. We find that while all three countries have similar public pension systems, older Americans benefit from more developed and better-funded public and private pension systems, as well as individual management of risky financial portfolios. We find that educational and health attainments of household heads and household wealth lead to a greater tendency to hold and manage risky assets. Our decomposition analysis also shows that the gap in stock ownership in Asian countries relative to the United States can be attributed to lower levels of development in financial and pension markets. However, these gaps have been shrinking more recently.

Asia is home to the most rapidly aging populations in the world. This study focuses on two countries in Asia that are advanced in terms of their demographic transition: the Republic of Korea and Singapore. We developed a demographic and economic state-transition microsimulation model based on the Korean Longitudinal Study of Aging and the Singapore Chinese Health Study. The model was employed to compare projections of functional status and disability among future cohorts of older adults, including disparities in disability prevalence by educational attainment. The model also projects increasing disparities in the prevalence of activities-of-daily-living disability and other chronic diseases between those with low and high educational attainment. Despite overall increases in educational attainment, all elderly, including those with a college degree, experience an increased burden of functional disability and chronic diseases because of survival to older ages. These increases have significant economic and social implications, including increased medical and long-term care expenditures, and an increased caregiver burden.

Japan is the oldest society in the world. It has the highest proportion of the population aged 65 and over, a demographic indicator that has been used by demographers for more than a century. One of the main objectives of this study is to apply a new indicator—the cognition-adjusted dependency ratio (CADR)—to remeasure the level of population aging from an innovative point of view. To compute this new index, we apply the mean age-group-specific immediate recall scores for Japan and four other Asian countries, and we compare the results with those derived from the United States and various developed nations in Europe. Our analysis shows that Japan’s pattern and level of age-related decline in cognitive functioning are highly comparable to those of many other developed nations, particularly in Continental Europe. Among the other Asian countries, Malaysia shows a pattern of change similar to countries in Southern Europe, although Malaysia has slightly lower scores than Southern Europe in all age groups. More importantly, these comparative results based on CADR are astonishingly different from the corresponding results obtained from conventional old-age dependency ratios. The Japanese case is the most salient example.

Asia is aging, although there is significant heterogeneity across subregions and economies. Population aging poses two strategic challenges for the region: sustaining economic growth and delivering old-age economic security. In this paper, we leverage the lifecycle perspective—that individuals’ consumption and labor income differ at each age—and the National Transfer Accounts database to construct and analyze key economic indicators. Our analysis confirms that demographic change will challenge the region’s future growth and increase the cost of funding the consumption of the elderly. We also find that it will have a substantial impact on the public finances of some Asian economies.

This paper uses the task-content-of-occupations framework to analyze trends in employment and wages of female and male workers in the Indian labor market from 1994 to 2017. Workers are classified into four main occupational categories: nonroutine cognitive, routine cognitive, nonroutine manual, and routine manual. Decomposing the changes in employment shares into between-industry changes and within-industry changes across occupational categories reveals that within-industry employment changes have increasingly played an important role, suggesting the growing importance of using the task-content framework to analyze labor market trends. The biggest increase in employment shares is for nonroutine cognitive occupations for both female and male workers. The wage analysis reveals that, on average, the gender wage gap has been lowest in routine cognitive occupations for most of the period of analysis. However, the analysis finds no consistent, significant changes in wages based on occupational specialization during the period of analysis.

Investment disparity in the education of persons with disabilities may be larger on the part of parents, in part resulting from predicted lower returns to the investment due to mistaken beliefs about their capabilities, or actual lower returns due to barriers in the labor market. Using a nationally representative dataset from Bangladesh and utilizing the framework of the Engel curve, we investigate intrahousehold investment decisions in education between children with and without disabilities. The results of the hurdle model show the existence of disability bias in enrollment decisions, whereas individual-level analysis suggests that bias exists on educational expenditure after children with disabilities enroll in school. Additionally, though we observe a lower level of bargaining power among household heads on educational investments for their children with disabilities, interaction effects suggest the importance of greater income stability and maternal education status being instrumental to improving the education of persons with disabilities.

In 2021, the United Nations Committee on Development Policy adopted a resolution that Bangladesh would graduate from least developed country (LDC) status after a period of 5 years. This means that in 2026 Bangladesh would have to forego its exemption to intellectual property (IP) provisions of the World Trade Organization (WTO). Bangladesh has taken advantage of the policy space it was granted under the LDC exemption to build a generic medicines industry that not only serves Bangladesh but also other LDCs. We examine how IP provisions in the WTO will impact the price of insulin in Bangladesh and the subsequent impacts on welfare and poverty. We find that LDC graduation will trigger a significant jump in insulin prices that could cause about a 15% decline in the welfare of households in Bangladesh with one or more members living with diabetes, increasing the poverty rate of such households unless policy adjustments are carried out.

This study extends the recent debate on the rate of return on cattle rearing in India, triggered by Anagol, Etang, and Karlan (2017) and followed by others, to the Bangladeshi context and finds that the apparent paradox of widespread cattle rearing despite negative returns in India is absent in Bangladesh. We use a nationally representative two-year panel data for rural Bangladesh and find that the average and marginal returns on raising cows and bullocks are positive and high in both 2011 and 2015. We show that appreciation of the value of cattle is the major contributing factor to positive returns. The existence of cattle markets where cattle can be freely traded for slaughter, milk production, or for any other purpose—which is constrained to various degrees in India—is the key to high and positive returns in Bangladesh.

Large allocations for fuel subsidies have long put the Government of Malaysia’s budget under great strain. Using a computable general equilibrium (CGE) model, this paper evaluates the impact of fuel subsidy rationalization on sectoral output and employment. Employment is classified into occupational categories and skill levels. Fuel subsidies were measured using the disaggregation of prices for petrol, diesel, and other fuel products. Findings show that removing fuel subsidies would hit economic performance through high input costs, specifically for industries closely attached to the petroleum refinery sector. The manufacturing sector has the largest reduction in output and employment. Nevertheless, high- and medium-skilled labor forces experience increased demand. To increase economic efficiency, the savings from the removal of fuel subsidies should be put toward policies such as sales tax reduction. This study provides useful information for policy makers in evaluating or updating current subsidy policies to reduce economic losses.