Friday, June 14, 2013

New papers from the Social Science Research Network

"The Relationship between Job Characteristics and Retirement Savings in Defined Contribution Plans During the 2007-2009 Recession"
Monthly Labor Review, 136(5), pp.3-16, 2013

CHRISTOPHER R. TAMBORINI, U.S. Social Security Administration
PATRICK PURCELL, Government of the United States of America - Social Security Administration
HOWARD IAMS, U.S. Social Security Administration

Pension trends in the United States, marked by the movement toward defined contribution (DC) plans, raise questions about the individual characteristics that influence retirement saving behavior. This study examines how DC participants’ industry and employer characteristics relate to the prevalence of reduced retirement account contributions in a time of severe recession (2007-2009). Data come from a restricted-use file that matches workers in the 2008 Survey of Income and Program Participation (SIPP) to their W-2 tax records received by the Social Security Administration. Multivariate probit models indicate several job-related factors, most notably a decline in real earnings, were linked to declines in participants’ contributions to defined contribution retirement plans during the recession of 2007–2009; employer size, occupation, and industry-specific employment losses, among other characteristics, were also associated with changes in retirement plan contributions.

"Sharing High Growth across Generations: Pensions and Demographic Transition in China"
UBS Center Working Paper Series, Working Paper No. 1, November 2012

ZHENG MICHAEL SONG, Fudan University - School of Economics
KJETIL STORESLETTEN, Stockholm University - Institute for International Economic Studies (IIES), University of Oslo - Department of Economics, Centre for Economic Policy Research (CEPR)
YIKAI WANG, University of Zurich
FABRIZIO ZILIBOTTI, University of Zurich, Centre for Economic Policy Research (CEPR), CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Intergenerational inequality and old-age poverty are salient issues in contemporary China. China’s aging population threatens the fiscal sustainability of its pension system, a key vehicle for intergenerational redistribution. We analyze the positive and normative effects of alternative pension reforms, using a dynamic general equilibrium model that incorporates population dynamics and productivity growth. Although a reform is necessary, delaying its implementation implies large welfare gains for the (poorer) current generations, imposing only small costs on (richer) future generations. In contrast, a fully funded reform harms current generations, with small gains to future generations. High wage growth is key for these results.

"Don't Raise Social Security Taxes: But If It's Necessary, Here's How"
American Enterprise Institute for Public Policy Research, No. 1, January 2013

ANDREW G. BIGGS, American Enterprise Institute

As the debt-ceiling debate begins, congressional Republicans will demand spending cuts to counter any increase in the debt limit. These spending cuts are likely to include entitlement reforms, with Social Security, particularly, as a prime target. Most congressional Democrats might favor payroll tax increases to make Social Security solvent. But higher taxes discourage work and personal saving and encourage early retirement, with negative consequences for the economy. Although these increases clearly are not the best way to solve America’s overall entitlement problem, they may be necessary to consider if an agreement is to be reached. If so, payroll tax increases should be levied across the board, not merely on high earners, to reduce the economic impact and make all Americans aware of the costs of the benefits they all receive.

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