TABLE OF CONTENTS Acknowledgements ........................................................................................................................ vi Abbreviations ................................................................................................................................. vii 1. Introduction ............................................................................................................................ 1 Background .............................................................................................................................. 1 Objectives of study .................................................................................................................. 1 Structure of the report ............................................................................................................ 1 2. The Active aging challenge for Latvia ..................................................................................... 2 Untapped potential in Latvia and the EU’s Active Aging Index ............................................... 2 Importance of moving beyond the averages .......................................................................... 5 Building a policy agenda for “50+” ........................................................................................ 12 3. Demographic challenge ........................................................................................................ 13 Population is imbalanced across generations ....................................................................... 13 Migration and falling fertility have driven demographic change .......................................... 17 Explaining declining fertility .................................................................................................. 19 Migration push and pull factors ............................................................................................ 21 Regional dimension to aging ................................................................................................. 25 Conclusions and policy directions ......................................................................................... 26 4. Productive aging ................................................................................................................... 30 Labor market performance in aging Latvia ........................................................................... 32 Correlates of labor supply of older adults ............................................................................. 43 Labor demand considerations ............................................................................................... 55 Job Quality ............................................................................................................................. 61 Profiling labor market vulnerability and non‐pension benefit receipt ................................. 69 Learning from other countries: What can be done to increase employment in an aging economy? .................................................................................................................................... 88 Conclusions and policy directions ....................................................................................... 100 5. Lifelong Learning in Latvia .................................................................................................. 103 Context: Skills acquisition along the life cycle ..................................................................... 103 Adult learning in Latvia ........................................................................................................ 105 Lifelong learning and adult education and training for older workers: Policy options....... 110 i Trade‐offs and prioritization ............................................................................................... 118 6. Economically Secure Aging ................................................................................................. 119 Poverty and vulnerability .................................................................................................... 119 Wage income of older workers ........................................................................................... 123 Pensions ............................................................................................................................... 125 Conclusions and policy directions ....................................................................................... 129 7. Healthy aging ...................................................................................................................... 131 Introduction ......................................................................................................................... 131 Aging cut short: Mortality trends ........................................................................................ 133 Aging better: Morbidity trends ........................................................................................... 139 Achieving better health: Reducing risk factors in the population ...................................... 142 Changes in health behavior: age effect or successful health policy? .................................. 147 Conclusions and health policy options ................................................................................ 148 8. Summary of policy options/priorities ................................................................................. 153 Overall policy priorities ....................................................................................................... 153 Policy Options Matrix .......................................................................................................... 155 References ................................................................................................................................... 180 Annex 1: Active Aging Index components ................................................................................... 190 Annex 2: Regional variation in covariates of labor supply among the pre‐retirement age group .................................................................................................................................................. 191 Annex 3: Job Quality Index methodology .................................................................................... 196 Annex 4: Comparison of benefit incidence in selected municipalities to all municipalities ....... 201 Annex 5: Profile of Labor Market Vulnerability of pre‐retirement age adults in 2007 ............... 203 Annex 6: Mincer equation estimates .......................................................................................... 204 Annex 7: Mortality trends ............................................................................................................ 212 TABLES Table 1: Latvia: Population to fall and become older .................................................................... 13 Table 2: Changing Profile of EURES Clients in Latvia, 2004‐2010 .................................................. 23 Table 3: The average effective age of retirement defined as the average age of exit from the labor force in selected countries ................................................................................................... 44 Table 4: Who has better jobs? Results by age in 2013 .................................................................. 65 Table 5: Who has better jobs? Results by gender and age in 2013 .............................................. 66 Table 6: Who has better jobs? Results by region and age in 2013 ................................................ 67 Table 7: Who has better jobs by component? Results by ethnicity / citizenship and age in 2013 68 Table 8: Who has better jobs? Results by education and age in 2013 .......................................... 69 Table 9: The majority of social assistance recipients are not working .......................................... 80 ii Table 10: Example of prioritization: overview of vulnerable groups and priority for action ........ 88 Table 11: SMEs are less likely to have workforce training plans and budgets ............................ 114 Table 12: Differences in mortality rates across education groups .............................................. 138 FIGURES Figure 1: Latvia ranks poorly among EU countries in the Active Aging Index ................................. 3 Figure 2: Latvia performs relatively well on the dimension “Employment” of the AAI .................. 6 Figure 3: National averages mask substantial inequalities in employment .................................... 7 Figure 4: The impact of the economic crisis differs systematically by educational attainment ..... 8 Figure 5: For the dimension “Independent and secure living” Latvia has the lowest score ........... 9 Figure 6: Latvia has relatively large inequality in unmet medical care needs ................................. 9 Figure 7: The risk of severe material deprivation differs significantly by gender ......................... 10 Figure 8: Participation in lifelong learning is low, with minor improvements after the crisis ...... 11 Figure 9: Building an active aging policy agenda for the “50+” ..................................................... 12 Figure 10: Under realistic fertility assumptions, migration becomes the biggest driver of population trends .........................................................................................................................