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February 2025

Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization

By David Autor, David Dorn, Gordon H. Hanson, Maggie R. Jones & Bradley Setzler This chapter analyzes the distinct adjustment paths of U.S. labor markets (places) and U.S. workers (people) to increased Chinese import competition during the 2000s. Using comprehensive register data for 2000–2019, we document that employment levels more than fully rebound in trade-exposed places after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies. The adjustment of places to trade shocks is generational: affected areas recover primarily by adding workers to...

Challenges and concerns surrounding China’s retirement age reform

By China Labour Bulletin China is currently grappling with a pressing demographic challenge, marked by record-low birth rates and low retirement ages, leading to a continuous decline in the working-age population. According to the National Bureau of Statistics, the working-age population dropped to 61.3% in 2023, down from 62% the previous year. The shrinking workforce and ageing population are increasingly straining China’s pension system. Current projections indicate that, without intervention, the social security system’s resources will be depleted by 2035. In response to...

Smaller than We Thought? The Effect of Automatic Savings Policies

By James J. Choi, David Laibson, Jordan Cammarota, Richard Lombardo & John Beshears Medium- and long-run dynamics undermine the effect of automatic enrollment and default savings-rate auto-escalation on retirement savings. Our analysis of nine 401(k) plans incorporates the facts that employees frequently leave firms (often before matching contributions from their employer have fully vested), a large percentage of 401(k) balances are withdrawn upon employment separation, and many employees opt out of auto-escalation. Steady-state saving rates increase by 0.6% of income due to automatic enrollment and...

January 2025

Pensions investment outlook 2025: U.S. policy uncertainty clouds road ahead

By Investment Managers The coming year will likely be characterized by three main drivers: the U.S.’s politically driven polices, structural economic 1 The implicit yield curve based on the floating rates associated with an interest rate swap. weaknesses and political uncertainty in Europe, and China’s restructuring of its troubled property market. Overall, our forecasts suggest global growth looks set to continue its 2024 pace of 3.2% in 2025, before easing in 2026 to 2.9%. This outlook could be compounded by the implementation...

Household Saving in Japan: The Past, Present, and Future

By Charles Yuji Horioka This paper explores the determinants of the level of, and trends over time in, Japan’s household saving rate, with emphasis on the impact of the age structure of the population, and makes projections about future trends therein. The paper finds that Japan’s household saving rate has not always been high either absolutely or relative to other countries and that it was only during the 1961-86 period that it exceeded 15%. Past and future trends in Japan’s...

Financial Inclusion Across the United States

By Motohiro Yogo, Andrew Whitten & Natalie Cox We study retirement and bank account participation for the universe of U.S. households with a member aged 50 to 59 in the administrative tax data. ZCTA-level average income, income inequality, and racial composition predict retirement account participation for low-income households, conditional on household income and regional price parities. Income inequality also predicts bank account participation for low-income households. We estimate the causal effect of access to an employer retirement plan on participation. Recent policy proposals...

The Looming Crisis: China’s Pension System Faces a Generational Challenge

By Jessica Huang China, a nation of immense scale and ambition, is in the grip of an urgent demographic crisis. Declining birth rates and rising life expectancy are rapidly aging the population. Within the next two decades, the number of retirement-age individuals is expected to surpass the entire population of the United States, with an estimated 402 million people over 60 by 2040—28% of China’s total population. This demographic shift is straining the workforce, social services, healthcare infrastructure, and economic productivity, marking...

Influencing Retirement Savings Decisions with Automatic Enrollment and Related Tools

By John Beshears, James J. Choi, David Laibson & Brigitte C. Madrian Historically, retirees in the US relied on the “three-legged stool” of Social Security, defined benefit (DB) pension plans, and personal savings to provide retirement income.1 Beginning in the late 1970s, however, access to DB plans began to fall while access to defined contribution (DC) plans, which require individuals to make their own savings plan contributions and investment decisions during their working years, rose.2 As of December 2023, retirement assets in...

Challenges Related to Aging Population

By Drishti The Vision Foundation The Supreme Court of India refused to entertain a writ petition that sought the establishment of a dedicated Ministry for senior citizens. The writ petition referred to senior citizens (population ageing) as a vulnerable class that deserves special attention under Article 21 of the Constitution, which ensures the right to a dignified life. Source Drishtiias

The Role of ‘Green’ Investors in Reducing Corporate Carbon Emissions

By National Bureau of Economic Research The researchers categorize public pension funds based on the political affiliation of the leaders who control them. Those under Democratic control, either through governance or board trusteeship, were labeled “green.” Those under Republican control were labeled “non-green.” The researchers assume that Democrats generally favor carbon emission reductions more than Republicans. They study emissions data from 2010–21 for 5,241 facilities across 685 publicly traded companies, along with data on pension fund stock holdings for 24 of...