Friday, June 5, 2015

New papers from the Social Science Research Network

DAVID CARD, University of California, Berkeley - Department of Economics, Institute for the Study of Labor (IZA), National Bureau of Economic Research (NBER)
RAND Corporation
U.S. Social Security Administration
Many job-losers suffer large and persistent losses in earnings capacity. For displaced workers who are age-eligible, one reaction to these losses is to begin claiming Social Security retirement benefits. We use administrative earnings records from the Social Security Administration’s Continuous Work History Sample to study the impacts of labor market shocks among workers in their late 50’s and early 60’s on Social Security retirement benefit claiming rates. We find that labor market shocks lead to current and future increases in the fraction of insured workers who initiate Social Security benefits at the earliest possible claiming age. Moreover, once they initiate benefits, early claimants continue to have low levels of earnings in all subsequent years.

RAJ AGGARWAL, University of Akron - Department of Finance
University of Akron - Department of Finance, College of Business Administration
Estimated expected returns are important for pension plans, as they influence many plan characteristics including required asset levels, annual contributions, and the extent of plan under- or over funding. Yet, there seems to be little prior literature on the factors influencing these estimated future returns. In an attempt to fill this gap, this paper presents the results of a panel analysis of data on the determinants of such returns used by US public defined-benefit (DB) pension plans for the period 2001-2011. As expected, we find that real return estimates by DB public pension funds are positively related to fund size, fund age, international asset diversification, state income, and corruption levels. However, more interestingly and importantly, we document that real return estimates by public US DB pension funds are positively related to cultural measures of individualism and masculinity, and negatively related to uncertainty avoidance. These results should be of much interest not only to scholars and pension beneficiaries, but also to fund managers, other capital market participants, and policymakers.

"Ageing in India: Need for Universal Pension Scheme" 
Economic & Political Weekly, May 2, Vol. 50(18), 41.
CHARAN SINGH, Indian Institute of Management (IIMB), Bangalore
Centre for Culture and Development
St Joseph's College, Bangalore

India has low pension coverage, and the pension system is unable to fulfill its purpose. A non-contributory, basic pension can guarantee a regular income in old age to all residents of the country, regardless of earning or occupation. The feasibility of introducing such a pension in India is explored in this paper. It is argued that a properly crafted universal pension scheme will increase the coverage of pension without putting stress on the fisc. 

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