March 2017

17Mar

Life-Cycle Consumption, Investment, and Voluntary Retirement with Cointegration between the Stock and Labor Markets

By Min Dai, Shan Huang & Seyoung Park (National University of Singapore) We present an optimal life-cycle consumption, investment, and voluntary retirement model for a borrowing and short sale constrained investor who faces cointegration between the stock and labor markets. With reasonable parameter values, there exists a target wealth-to-income ratio under which the investor does not participate in the stock market at all, whereas above which the investor increases the proportion of financial wealth invested in the stock market as...

March 17, 2017
Articles, Investing, Labor Market, Pension design, ,
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14Mar

Personalized Information as a Tool to Improve Pension Savings: Results from a Randomized Control Trial in Chile

By Olga Fuentes; Jeanne Lafortune; Julio Riutort; José Tessada Félix Villatoro We randomly offer to workers in Chile personalized versus generalized information about their pension savings and forecasted pension income. Personalized information increased the probability and amounts of voluntary contributions after one year without crowding-out other forms of savings. Personalization appears to be very important: individuals who overestimated their pension at the time of the intervention saved more. Thus, a person’s inability to understand how the pension system affects them...

March 14, 2017
Articles, Labor Market, Savings, , , ,
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February 2017

23Feb

Savings Externalities in a Second-Best World

By Andrew T. Hayashi (University of Virginia) & Daniel Patrick Murphy (University of Virginia) Abstract:       The debate among legal scholars about individuals’ failure to save enough for retirement happens on a “micro” level. It focuses on the causes and consequences of undersaving from the perspective of individuals and analyzes how legal interventions, such as tax subsidies and nudges, can best address individual saving mistakes. This debate depends on certain assumptions about how the macroeconomy operates. When these assumptions...

February 23, 2017
Articles, Regulation, Savings, ,
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04Feb

Privatizing Pensions: The Transnational Campaign for Social Security Reform

By Mitchell A . Orenstein Most Americans know of President George W. Bush’s 2005 proposals for new pension reforms to privatize Social Security, but few are aware of a conversation that took place on September 11, 1997, between then Texas Governor Bush and José Piñera, a former Chilean Secretary of Labor and Social Security. Piñera is an internationally known advocate of private, individual pension savings accounts who led the effort to replace Chile’s social security system with individual accounts in...

February 4, 2017
Books, System Sustainability, , , ,
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04Feb

The Effect of Non-contributory Pensions on Saving in Mexico

By IADB This paper examines the effects of non-contributory pension programs at the federal and state levels on Mexican households’ saving patterns using micro data from the Mexican Income and Expenditure Survey. The federal program by itself appears to reduce the saving rate of households whose oldest member is either 18 to 54 or 65 to 69. State programs by themselves have no significant effects on household saving rates in the smallest localities, but in larger localities they may reduce...

February 4, 2017
Adequacy, Articles, Pension design, , ,
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04Feb

Non-Contributory Pensions and Savings: Evidence from Argentina

By Martín González-Rozada & Hernán Ruffo This paper examines the effects of Argentina’s Plan de Inclusión Previsional (PIP), which changed the pension system in a way that generated a new noncontributory pillar, produced a huge expansion in pension coverage between 2005 and 2008 and a transfer of a vast amount of resources to households. Using a difference in differences methodology it is found that the PIP policy has reduced the incentives to work and to be in the labor force...

February 4, 2017
Adequacy, Articles, Pension design, , ,
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04Feb

The Voluntary Contributions Model–Study Regarding The Completion Of The Length Of Service

By Constantin Anghelache & Ana CARP In this article we present the study on “Buying years of service (seniority)” which is a particular case of the voluntary contributions model proposed by the author in a previous work. In the case study presented in this article, we show the groups of people addressed by Law no.186 / 2016 for “buying years of service”, we quantify the results of applying this legislative measure and we estimate the implications on the evolution of...

February 4, 2017
Articles, Pension design, System Sustainability, ,
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04Feb

The Role of Social Security in Overall Retirement Resources: A Distributional Perspective

By Alice Henriques & John Sabelhaus During recent decades, the US employer-sponsored retirement system has undergone a major shift from primarily defined benefit (DB)-type plans to primarily defined contribution (DC)-type plans. Furthermore, in the past decade, participation in employer retirement plans has fallen, particularly for younger and lower-income families. In light of this, there is growing concern that wealth accumulation through employer-provided pension plans is falling short, especially for the bottom half of the income distribution. However, focusing only on...

February 4, 2017
Articles, Pension design, Regulation, , ,
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04Feb

Non-Contributory Pensions Number-Gender Effects on Poverty and Household Decisions

By Miguel Ángel Borrella, Mariano Bosch & Marcello Sartarelli Non-contributory pensions, designed to reduce old-age poverty particularly in countries with low contributory coverage, may induce a variety of household behavioural responses. This paper tests whether they vary with beneficiaries number and gender in Bolivia, one of the countries with the lowest contributory coverage worldwide. Taking advantage of a discontinuity in eligibility at age 60 in the Renta Dignidad pension, we estimate these effects by using a bi-dimensional regression discontinuity design,...

February 4, 2017
Articles, Pension design, Savings, , ,
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