Delaying the Normal and Early Retirement Ages in Spain: Behavioural and Welfare Consequences for Employed and Unemployed Workers

In this paper, we explore the links between pension reform, early retirement, and the use of unemployment as an alternative pathway to retirement. We use a dynamic rational expectations model to analyze the search and retirement behaviour of employed and unemployed workers aged 50 or over. The model is calibrated to reproduce the main reemployment and retirement patterns observed between 2002 and 2008 in Spain. It is subsequently used to analyze the effects of the 2011 pension reform in Spain, characterized by 2-year delays in both the early and the normal retirement ages. We find that this reform generates large increases in labour supply and sizable cuts in pension costs, but these are achieved at the expense of very large welfare losses, especially among unemployed workers. As an alternative, we propose leaving the early retirement age unchanged, but penalizing the minimum pension (reducing its generosity in parallel to the cuts imposed on individual pension benefits, and making it more actuarially fair with age). This alternative reform strikes a better balance between individual welfare and labour supply stimulus.     

Identifying technically efficient fishing vessels: a non‐empty,minimal subset approach

Stochastic frontier models are often employed to estimate fishing vessel technical efficiency. Under certain assumptions, these models yield efficiency measures that are means of truncated normal distributions. We argue that these measures are flawed, and use the results of Horrace ( 2005 ) to estimate efficiency for 39 vessels in the Northeast Atlantic herring fleet, based on each vessel's probability of being efficient. We develop a subset selection technique to identify groups of efficient vessels at pre‐specified probability levels. When homogeneous production is assumed, inferential inconsistencies exist between our methods and the methods of ranking the means of the technical inefficiency distributions for each vessel. When production is allowed to be heterogeneous, these inconsistencies are mitigated. Copyright © 2007 John Wiley & Sons, Ltd.     

The influence of taxes on migration: evidence from Switzerland

Empirical studies on the impact of taxation on migration havebeen limited by a lack of comparable data in an internationalcontext and a lack of variation in tax burdens within countries.A notable exception to the latter is Switzerland. Prior empiricalstudies on tax competition in Switzerland have had to rely onaggregated data. In general, these studies have been supportiveof the notion of tax competition, i.e., high earners tend torelocate to low-tax regions. The authors use an alternativepanel approach based on micro-data from the first three wavesof the newly established Swiss Household Panel. Despite activecommunity tax policies aimed at attracting new residents anda significant increase in tax-burden dispersion among communitiesin the past decade, no tax-induced migration is observed. Migrationdecisions are found to be strongly influenced by accommodation-relatedfactors that point to important housing-market effects.     

Job insecurity,employability and health: an analysis for Germany across generations

In this article, we use 12 waves of the German Socio-Economic Panel (GSOEP) to examine the relationship between job insecurity, employability and health-related well-being. Our results indicate that being unemployed has a strong negative effect on life satisfaction and health. They also, however, highlight the fact that this effect is most prominent among individuals over the age of 40. A second observation is that job insecurity is also associated with lower levels of life satisfaction and health, and this association is quite strong. This negative effect of job insecurity is, in many cases, exacerbated by poor employability.     

Backtesting extreme value theory models of expected shortfall

We use stock market data to analyze the quality of alternative models and procedures for forecasting expected shortfall (ES) at different significance levels. We compute ES forecasts from conditional models applied to the full distribution of returns as well as from models that focus on tail events using extreme value theory (EVT). We also apply the semiparametric filtered historical simulation (FHS) approach to ES forecasting to obtain 10-day ES forecasts. At the 10-day horizon we combine FHS with EVT. The performance of the different models is assessed using six different ES backtests recently proposed in the literature. Our results suggest that conditional EVT-based models produce more accurate 1-day and 10-day ES forecasts than do non-EVT based models. Under either approach, asymmetric probability distributions for return innovations tend to produce better forecasts. Incorporating EVT in parametric or semiparametric approaches also improves ES forecasting performance. These qualitative results are also valid for the recent crisis period, even though all models then underestimate the level of risk. FHS narrows the range of numerical forecasts obtained from alternative models, thereby reducing model risk. Combining EVT and FHS seems to be best approach for obtaining accurate ES forecasts.     

Monetary Policy,Taylor’s Rule and Instability

We analyse the dynamic behaviour of an economy where the central bank (CB) sets interest rates according to a Taylor‐type policy rule. A simple model for a closed and instability‐prone economy is constructed and subjected to formal dynamical analysis and numerical simulation. It is shown that a requirement for local stability is that the two response coefficients in the policy rule be positive. Similarly, it is shown that raising the response coefficient of the output gap increases the likeliness of the economy being stable, whereas raising the response coefficient of the inflation gap has an uncertain and probably negligible effect on local stability. Self‐sustained oscillations may arise for certain parameter values. Policy mistakes in the estimation of the long‐run equilibrium real interest rate or potential real GDP may prevent the CB from achieving its inflation target. A suggestion for enhancing the stabilization capacity of Taylor‐type policy rules in the context of the model presented is made.     

Does unemployment lead to a less healthy lifestyle?

In this article, we use 22 years of data from the German Socio-Economic Panel and information on plant closures to investigate the effects of unemployment on four indicators of unhealthy lifestyles: diet, alcohol consumption, smoking and (a lack of) physical activity. In contrast to much of the existing literature, which unlike our analysis is unable to assess causality, our results provide little evidence that unemployment gives rise to unhealthy lifestyles.     

Extreme exclusion and relative deprivation in subsistence marketplaces: A study in a refugee settlement in Nakivale,Uganda

We study how refugees in a settlement face extreme marketplace exclusion through three phases of qualitative research. Overlaying the context of subsistence marketplaces, such exclusion is accentuated by refugee status, fleeing from unimaginable suffering. We interpret our findings in terms of relative deprivation, or the state of feeling deprived relative to some social reference, often used to understand how consumers feel deprived in terms of their relative financial status. We extend relative deprivation theory in research, introducing extreme marketplace deprivation. Whereas most relative deprivation research emphasizes social comparisons to other people, our study of the refugee settlement demonstrates the adverse effects of intrapersonal relative deprivation, that is, feeling deprived relative to one's past. We develop a theoretical framework to demarcate types of extreme marketplace deprivation, classifying these experiences in terms of consumption and livelihood along three facets (material, social, and psychological). We derive implications for consumer affairs.