November 2022
16Nov

Financial System: Challenges and Opportunities of Digital Transformation in Mexico

By Vanessa Veintimilla Brando & Daniel Miranda Lopez This work aims to understand the implications that financial technology represents for the Mexican financial system. Considering that the adoption of new technologies in the financial system (Fintech) is increasing, a novel and complex context has arisen with diverse implications in various aspects such as education, infrastructure, and the regulatory and supervisory framework needed to ensure a healthy development of the financial system. Although it has been shown that digitization brings...

November 16, 2022
Articles, Innovation, , , ,
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11Nov

Preparing for Retirement Reforms

By Karen E. Smith, Eugene Steurele, Damir Cosic Each of the three pillars of the US retirement system—Social Security, employer pensions, and private savings—suffers from serious problems that could threaten the financial security of future retirees. Social Security is at risk of becoming insolvent. If policymakers fail to act, Social Security benefits will be cut by about 25 percent starting in 2035, and even with reform, some combination of a slowdown in benefit growth for retirees and higher taxes on...

November 11, 2022
Articles, Pension design, , , , ,
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11Nov

Cognitive Abilities, Self-Efficacy, and Financial Behavior

By Ning Tang This paper investigates the effect of cognitive abilities on financial behavior among older adults. Using the longitudinal dataset of the Health and Retirement Study, I find that cognitive abilities significantly affect financial behavior through two channels: ability and self-efficacy. People with higher cognition scores, who presumably are more capable of processing information and analyzing problems, achieve better financial outcomes. This positive association is especially strong in tasks having high demand of cognitive ability, which confirms the ability...

November 11, 2022
Aging, Articles, ,
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11Nov

Future-Proof Work? The Experiences of Gig Economy Workers in the Philippines

By Christopher Ed Caboverde & John Paul Flaminiano The COVID-19 pandemic caused massive disruptions in the job market. This also puts the "gig economy" in the spotlight since many workers are seeing it as a viable career option, and are considering leaving their 9-to-5 jobs to pursue a career there. Even before the pandemic, the gig economy forms a significant portion of the workforce in different countries. This paper aims to understand the journey and experiences of location-dependent and purely...

November 11, 2022
Articles, Labor Market, , ,
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03Nov

Older Persons’ Rights to Social Security

By Alan Gutterman Article 22 of the Universal Declaration of Human Rights provides that “[e]veryone, as a member of society, has the right to social security”, and Article 9 of the International Covenant on Economic, Social and Cultural Rights (“ICESCR”) calls on States to “recognize the right of everyone to social security, including social insurance”. In its General Comment No. 19 on the right to social security released in 2008, the Committee on Economic, Social and Cultural Rights (“CESCR”) explained...

November 3, 2022
Aging, Articles, , ,
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03Nov

Risk Pooling and Precautionary Saving in Village Economies

By Marcel Fafchamps & Aditya Shrinivas We propose a new method to test for efficient risk pooling that allows for intertemporal smoothing, non-homothetic consumption, and heterogeneous risk and time preferences. The method is composed of three steps. The first one allows for precautionary savings by the aggregate risk pooling group. The second utilizes the inverse Engel curve to estimate good-specific tests for efficient risk pooling. In the third step, we obtain consistent estimates of households' risk and time preferences using...

November 3, 2022
Articles, Savings, , ,
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03Nov

Trends in State and Local Pension Funds

By Oliver Giesecke & Joshua D. Rauh Unfunded public pension obligations represent the largest liability for state and local governments in the United States. As of fiscal year 2021, the total reported unfunded liabilities of these plans is $1.076 trillion. In contrast, the market value of the unfunded liability is approximately $6.501 trillion. As a result, the reported funding ratio of 82.5% falls to 43.8% under a market-based valuation. The market values reflect the fact that accrued pension promises are...

November 3, 2022
Articles, Pension design, , ,
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October 2022
28Oct

Optimal Savings and Portfolio Choice with Risky Labor Income and Reference-Dependent Preferences 

By Servaas van Bilsen, Roger J. A. Laeven & Theo Nijman This paper explores the joint impact of reference-dependent preferences and non- tradable risky labor income on optimal savings and portfolio decisions. We develop a non-trivial solution procedure to determine the optimal policies. Our results reveal that the impact of permanent labor income shocks on both the optimal savings rate and the optimal portfolio share is more pronounced under reference- dependent preferences than under CRRA preferences. In particular, we find...

October 28, 2022
Articles, Investing, Savings, , ,
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28Oct

Intergenerational Solidarity

By Alan Gutterman Aging is a natural progression of the life cycle and society will always have persons of different ages who need to learn to live alongside one another. One of the most consistent themes in the debate regarding the realization of the human rights of older persons is the need to strengthen “intergenerational solidarity” between and among all levels of families, communities and nations in order to achieve social cohesion and a society for all ages and build...

October 28, 2022
Aging, Articles, Labor Market, ,
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28Oct

Discounting and the Market Valuation of Defined Benefit Pensions

By luca larcher & Francis Breedon We investigate how defined benefit pension schemes of FTSE firms are valued by the equity market, focusing on how future liabilities are discounted (since UK data allows us to estimate the duration of pension liabilities fairly accurately). We find that equity market valuation is consistent with discounting without allowing for credit risk. This differs from the approach used in published accounts for which IAS 19 (and SFAS No. 158, its US equivalent) allows for...

October 28, 2022
Articles, Pension design, ,
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