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January 2024

19Jan

Inter-Generational Spillovers in Labor Supply: Evidence from a Danish Retirement Reform

By Malene C. F. Laczek In this paper, I study how the labor supply of one generation affects the next. Utilizing longitudinal Danish register data and a large retirement reform, I document that parents’ retirement significantly affects the labor supply of their adult children. This inter-generational link is driven solely by mothers. Concretely, mothers’ retirement permanently increases their adult children’s income rank by 7 income rank points, driven by increased hours worked, participation in the labor force, improved occupational rank,...

January 19, 2024
Articles, Labor Market, , , ,
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19Jan

Social Security and Inequality in Belgium

By Giulia Klinges, Alain Jousten & Mathieu Lefebvre Over the years, the Belgian social security system has undergone substantial reform with a prime focus on increasing older worker labor force participation. The paper explores the effect of past reforms on inequality in old age. We distinguish two separate effects: The mechanical effect considers the change in inequality and expected benefit levels due to the reforms for a fixed retirement age distribution. The behavioral effect accounts for the endogenous change caused...

January 19, 2024
Articles, System Characterization, , , ,
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19Jan

Occupations Shape Retirement Across Countries

By Philip Sauré, Arthur Seibold, Elizaveta Smorodenkova & Hosny Zoabi We study how occupations shape individual and aggregate retirement behavior. First, we document large differences in individual retirement ages across occupations in U.S. data. We then show that retirement behavior among European workers is strongly correlated with U.S. occupational retirement ages, indicating an inherent association between occupations and retirement that is present across institutional settings. Finally, we find that occupational composition is an important determinant of aggregate retirement behavior across...

January 19, 2024
Articles, Labor Market, ,
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12Jan

Between Individual Risk and State Responsibility: 20 Years of Swedish Premium Pensions

By Anika Seemann  In 2000, the Swedish pension reform of 1998 led to the introduction of a capital-funded pension component with individual investment accounts in the first pillar of the pension system, known as the premium pension. This article takes the 20th anniversary of the Swedish premium pension as an opportunity for a fundamental evaluation. It shows which guiding principles the premium pension system was founded on when it was introduced, which problems have arisen since its introduction, how the...

January 12, 2024
Articles, System Characterization, ,
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12Jan

Pension Systems (Un)Sustainability and Fiscal Constraints: A Comparative Analysis

By Michael Wickens  Using an overlapping generations model, two new indicators of public pension system sustainability are proposed: the pension space, which measures the capacity to pay for pension expenditures out of labour taxation, and the pension space exhaustion probability reflecting demographic uncertainties. These measures reveal that the pension spaces of advanced economies are strikingly different. Most nations have little scope to further finance pensions out of labour income  taxation over the next thirty years. There is no one-size-fits-all solution....

January 12, 2024
Articles, System Sustainability, , ,
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12Jan

The Fiscal Cost of Aging in Belgium: Pensions and Healthcare

By Jean-Jacques Hallaert Belgium faces a fiscal consolidation challenge at a time when the fiscal cost of aging—primarily related to pension and health outlays—is mounting. Pension spending will increase relatively fast unless a combination of measures related to pension generosity and retirement eligibility are put in place. Potential efficiency gains are large in the health sector and could absorb part of the fiscal and reorganization costs related to an aging population. Source SSRN

January 12, 2024
Aging, Articles, , ,
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December 2023

15Dec

Subjective survival beliefs and social networks

By Seung Jeonga, Iqbal Owadallya, Steven Habermana & Douglas Wright People's perceptions about their chances of survival are known to deviate from the objective survival probabilites derived statistically from mortality data. This is crucial because it may explain why people save too little, why their retirement plans are inadequate, and why they do not buy financial security products such as life insurance and annuities which could protect them and their family in the event of early death or in old...

December 15, 2023
Aging, Articles, , , ,
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15Dec

Innovative Combo Product Design Embedding Variable Annuity and Long-Term Care Insurance Contracts

By Yang Shen, Michael Sherris, Yawei Wang & Jonathan Ziveyi This paper presents a novel combo insurance product design consisting of a variable annuity contract embedded with guaranteed minimum income benefits and long-term care insurance. This combo product provides enhanced benefits when the policyholder is functionally disabled. The Hamiltonian Monte Carlo simulation technique is utilised for numerically valuing the combo product whose underlying fund is proportionally invested in multiple asset classes. Product features including the elimination period and the maximum...

December 15, 2023
Articles, Pension design, , ,
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15Dec

Scale Economies, Bargaining Power, and Investment Performance: Evidence from Pension Plans

By Tjeerd de Vries, S. Yanki Kalfa, Allan Timmermann & Russ Wermers We explore the relation between the size of a defined benefit pension plan and its choice of active vs. passive management, internal vs. external management, and public vs. private markets. We find positive scale economies in pension plan investments; large plans have stronger bargaining power over their external managers in negotiating fees as well as having access to higher (pre-fee)-performing funds, relative to small plans. Using matching estimators,...

December 15, 2023
Articles, Pension Management, ,
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15Dec

The Shift that Redefined Retirement Security

By Shashwat Vidhu Sher Retirement plans have been a standard feature of public and private sector employers in the United States since the early 1900s. Although Defined Benefit plans were the mainstay of most pensions plans for much of the twentieth century, there was a massive shift in the 1980s, mainly in the private sector, towards Defined Contribution plans like 401(k). The paper argues that government policies for the private sector, new employer-employee relationship, job-switching, and familiarity with the financial...

December 15, 2023
Articles, Pension design, , , ,
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