November 2021
26Nov

Population Aging and Worklife Duration: Myths and Realities in the Canadian Context

By Gilbert M., Yves Carrière & Marcel Mérette Population ageing is raising concerns about labour shortage and public finance sustainability, on the assumption that increased age-based dependency ratio is a synonym of shrinking working lifespan for financing expanding lifespan consumption. However, such assumptions usually omit an appropriate account of changing labour force participation and hours worked (behavioural components) which could be playing toward or against the tides of populating ageing (structural components). This paper estimates worklife duration in Canada between...

November 26, 2021
Aging, Articles, Labor Market, ,
Read more...
26Nov

Preventing Reforming Unequally

By Axel H. Boersch-Supan, Klaus Härtl, Duarte Nuno Leite & Alexander Ludwig Population aging has forced policy makers in most developed countries to reform pension systems with the aim to maintain or re-establish financial sustainability. This usually involves cost-cutting measures like later pension eligibility ages and lower replacement rates. Such reforms face harsh trade-offs with the objective of providing adequate pensions. Social welfare and inequality have emerged as crucial concerns about recent pension reforms, stressing that the lack of 'social...

November 26, 2021
Aging, Articles, Regulation, , ,
Read more...
19Nov

Ethics of the Environment

By Julia M. Puaschunder Globalization leveraged pressure on contemporary society. Today's most pressing social dilemmas regarding climate change demand for inclusive solutions that marry the idea of sustainable growth with environmental economics. Understanding the bounds of environmental limits to avoid ethical downfalls beyond the control of singular nation states infringing on intergenerational equity – the fairness to provide an at least as favorable standard of living to future generations as enjoyed today – has become a blatant demand. In a...

November 19, 2021
Articles, System Sustainability, , ,
Read more...
19Nov

Early Retirement of Employees in Demanding Jobs: Evidence from a German Pension Reform

By Johannes Geyer, Svenja Lorenz, Thomas Zwick & Mona Bruns Early retirement options are usually targeted at employees at risk of not reaching their regular retirement age in employment. An important at-risk group comprises employees who have worked in demanding jobs for many years. This group may be particularly negatively affected by the abolition of early retirement options. To measure differences in labor market reactions of employees in low- and high-demand jobs, we exploit the quasi-natural experiment of a cohort-specific...

November 19, 2021
Articles, , ,
Read more...
19Nov

Asset Allocation: Glide Path Design for Target Date Retirement Funds

By Thomas Present, Sharon Persyn In this thesis, we discuss and compare target date retirement fund strategies that have been used in recent literature. These strategies include the 100% equity, glide path, maximum drawdown, risk budget and target return strategy. We conduct sensitivity analyses in order to obtain optimal parameters for the different strategies. We first compare the strategies with rebalancing between two asset classes: equity (Russell 1000) as the risky asset and bonds (10Y US government bonds) as the...

November 19, 2021
Articles, Investment, Pension Management, , ,
Read more...
13Nov

Quantifying the Impact of Impact Investing

By Andrew W., Ruixun Zhang We propose a quantitative framework for assessing the financial impact of any form of impact investing, including socially responsible investing (SRI), environmental, social, and governance (ESG) objectives, and other non-financial investment criteria. We derive conditions under which impact investing detracts from, improves on, or is neutral to the performance of traditional mean-variance optimal portfolios, which depends on whether the correlations between the impact factor and unobserved excess returns are negative, positive, or zero, respectively. Using...

November 13, 2021
Articles, Investment,
Read more...
13Nov

How Will COVID-19 Affect Pensions for Noncovered Workers?

By Jean-Pierre Aubry, Kevin Wandrei, Laura Quinby Federal law allows certain state and local government employees to be excluded from Social Security if they are covered by an employer pension of sufficient generosity. As a result, approximately one-quarter of state and local workers are not covered by Social Security on their current job. Before COVID-19, these “FICA replacement plans” all satisfied the letter of the law in terms of providing benefits of sufficient generosity. This study has three aims. The...

November 13, 2021
Articles, Labor Market, Pension design, , ,
Read more...
13Nov

Fiduciary Duty, Social Conscience, and ESG Investing by a Trustee

By Max M. Schanzenbach, Robert H. Sitkoff This chapter, prepared for the 2021 Annual Heckerling Institute on Estate Planning, examines the law and economics of environmental, social, and governance (ESG) investing by a trustee. Trustees of pensions, charities, and personal trusts invest tens of trillions of dollars of other people’s money subject to a sacred trust known in the law as fiduciary duty. Recently, these trustees have come under increasing pressure to use ESG factors in making investment decisions. ESG investing...

November 13, 2021
Articles, Investment, ,
Read more...
05Nov

The Economic Burden of Pension Shortfalls: Evidence from House Prices

By Darren Aiello, Asaf Bernstein, Mahyar Kargar, Ryan Lewis & Michael Schwert U.S. state pensions are underfunded by trillions of dollars, but their economic burden is unclear. In a model of inefficient taxation, real estate fully reflects the cost of pension shortfalls when it is the only form of immobile capital. We study the effect of pension shortfalls on real estate values at state borders, where labor and physical capital could more easily relocate to a state with a smaller...

November 5, 2021
Articles, Pension design, , , , ,
Read more...
05Nov

The Skill-Specific Automatability of Aging Workers and Retirement Decisions

By Zeewan Lee Much of the discourse on the impact of automation on labor supply tends to assess the labor force as a whole, thereby disregarding the marginal effect on aging workers. In lights of the growing technological changes, we assess the linkage between the automatability of workers and retirement timing. Based on the theoretical model of task-based technological changes and drawing data from the Health and Retirement Study and O*NET, we create an Automatability Index based on workers’ primary...

November 5, 2021
Aging, Articles, Innovation, Labor Market, , ,
Read more...