Maintaining incomes after work: do compulsory earnings-related pensions make sense?

Most of the recent debate about pension reform has focused onthe extent to which benefits should be provided publicly, throughearnings-related social insurance, or privately, via compulsorysaving. Little attention has been paid to the more importantissue of whether there is a rationale for any form of compulsoryearnings-related pension provision. This article examines threemain rationales for this form of pensioning: moral hazard, myopia/paternalism,and willingness to pay. It concludes that, though the last ofthese may provide a political explanation for why earnings-relatedsocial-insurance schemes were first introduced, it is difficultto find an economic rationale for why such provision shouldbe continued. Nor are there convincing arguments for replacingearnings-related social insurance with compulsory saving. Hence,the pension reform debate should focus less on the way schemesare financed and more on the most appropriate shape for compulsorypension benefits.     

Chinese household saving and dependent children: Theory and evidence

This paper examines the impact of family size on household saving. We first study a theoretical life-cycle model that includes finite lifetimes and saving for retirement and in which parents care about the consumption by their dependent children. The model implies a negative relationship between the number of dependent children in the family and the household saving rate. Then, we test the model's implications using new survey data on household finances in China. We use the differential enforcement of the one-child policy across counties to address the possible endogeneity between household saving and fertility decisions in a two-stage least squares Tobit regression. We find that Chinese families with fewer dependent children have significantly higher saving rates. The data yields several additional insights on household saving patterns. Households with college-age children have lower saving rates, and households residing in urban areas have higher saving rates and a lower ratio of education expenditures to income. However, having an additional child reduces saving rates more for households in urban areas than in rural areas. Our regressions also indicate that saving rates vary with age and tend to be higher for households with more workers, higher education, better health, and more assets.     

Incomplete property rights, exposure to markets and the provision of environmental services in China

This paper uses data from a 2003 rural survey to examine the determinants of household provision of environmental services under China's Sloping Land Conversion Program (SLCP), the largest payments for environmental services program in the developing world. The paper examines the determinants of plot-level survival rates of program-planted trees and grasses. It finds that household rights over retired land as well as autonomy in program decision-making (which we argue on the basis of supportive evidence are plausibly exogenous to post-retirement outcomes) have important and potentially countervailing impacts on the provision of environmental services targeted by the program. Households permitted to select what to plant obtain better program outcomes, but do not make the choices that the government would like them to, while those permitted to decide what land to retire perform worse. The analysis also finds that households more vested and experienced in agriculture and with less exposure to off-farm labor markets fare better in managing their planted trees. Significant learning-by-doing effects are also evident, suggesting that greater technical support to farmers could improve outcomes and lower program costs.     

Demographic threat to the economy: Macroanalysis of Russia’s pension system

The pension reform in our country that is based on insurance principles has surpassed the second decade, and many elements that were originally written proceeding from speculative designs and successful practice in Western countries have acquired actual features (quantitative and qualitative). In the first place, this is relevant for its principally new elements—the accumulative pension provision methods. This paper analyzes the external and internal factors in the development of the pension system and their effect on the current and future state of the system and gives a forecast of the financial stability of the pension system in the long-term outlook.     

Do Mandatory Pensions decrease Household Savings? Evidence for the Netherlands

The Dutch mandatory pension system consists of two parts: a public pay-as-you-go part that provides a minimum income to all Dutch inhabitants over age 64 and an occupation-specific capital-funded part that provides supplementary retirement income. The goal of this paper is to test for the effect of mandatory pensions on discretionary household savings. The data are drawn from the CentER Savings Survey. A result of the empirical analysis is that the impact of the public part of the Dutch pension system is not well identified. The occupational pensions have a significant negative impact on savings motives with respect to old age. The evidence on the effect on household wealth is mixed.     

Saving for retirement: The U.S. case

This paper discusses the personal saving behavior and the retirement behavior of households in the United States. It shows that a typical U.S. household owns virtually no financial savings even at ages approaching retirement. Most personal saving is in the form of housing equity, which, however, is not decumulated during retirement and thus cannot be counted on as retirement wealth. Saving for retirement is largely conducted by corporations and government through pension plans and Social Security. It also presents evidence indicating a relatively large impact on the Individual Retirement Account program on personal savings. The paper casts doubts on the applicability of the pure life-cycle saving hypothesis for the U.S. households. J. Japan. Int. Econ., December 1988, 2(4), pp. 385–416. Kennedy School of Government, Harvard University, Cambridge, Massachusetts 02138; and National Bureau of Economic Research, Cambridge, Massachusetts 02138.     

家庭养老是现阶段农村养老保障制度的主体

农村养老问题已经成为重要的社会问题,不少人士认为,通过建立农村社会养老保险制度可以解决农民的养老问题,这种观点尤其在新农保制度开始启动后得到了支持。文章通过从农村家庭养老的历史变迁、农村家庭养老存在的社会文化和经济基础及新农保制度设计等方面进行分析,认为家庭养老仍是现阶段农村养老保障制度的主体,并提出构建农村养老保障体系、发挥基层组织作用、完善农村家庭养老法律制度和加快农村经济发展等完善家庭养老的对策。     

The evolution of pension size in pensioner’s income parameters

Preliminary results from the first stage of the 2002–2008 pension reform, as well as the state of pension provision in the prereform period and their effect on pensioner’s income provision, are examined in terms of a methodological problem in organizing a pension system.     

Concepts and Measures of Saving: Selected Issues for South Africa

South African household savings rates have been declining steadily over the last five decades, raising concerns that the population structurally under‐saves. Against the background of new saving‐enhancing policy initiatives, this paper asks to what extent the concern is founded, and whether the measurement of saving is really appropriate to guide economic policy. Comparing different macroeconomic concepts and measurements of saving, we show that the measure of saving in the national accounts (the residual between income and expenditure) understates the household savings rate compared to other measures. Specifically, an alternative measure from the balance sheets (the change in wealth) yields a significantly higher and non‐declining figure. While households have not been “putting aside” their incomes, they have nevertheless grown richer, driven largely by the appreciation of asset valuations. We also examine the impact of taking non‐financial saving and wealth into account, and conclude that household sector saving on the aggregate is significantly higher than the national accounts suggest. However, these adjusted measures are most relevant for the upper tail of the income and wealth distribution, raising important distributional concerns.     

Household savings in China

The domestic saving rate in China is the highest in the world and it surpasses the investment share in GDP, which is also very high by international standards. This excessive saving results in a large current account surplus. Understanding why the Chinese save so much is a central issue in the debate on global imbalances. The goal of our paper is to analyse empirically Chinese household saving behaviour taking into account the disparities within the country, at the provincial level and between rural and urban households. We first show that, notwithstanding the rising contribution of government and firms to national savings the real peculiarity lies with Chinese families. We move from Modigliani and Cao's (2004) attempt to explain rising personal saving in China within the life cycle hypothesis and show how a more careful analysis indicates that life-cycle determinants do not suffice, especially in the most recent period. Once we consider regional differences and distinguish urban and rural households using provincial-level data, it becomes clear that additional explanations are needed and that precautionary motives and liquidity constraints are playing an important role. Our results suggest that in order to reduce the propensity to save of Chinese households it is necessary to improve social services provision and to facilitate the access to credit.     

ARV Treatment and Time Allocation to Household Tasks: Evidence from Kenya

Using longitudinal survey data collected over a period of two years, this paper examines the impact of antiretroviral (ARV) treatment on the time allocated to various household tasks by treated HIV-positive patients and their household members. We study outcomes such as time devoted to housework, firewood and water collection, as well as care-giving and care-seeking. As treatment improves the health and productivity of patients, we find that female patients in particular are able to increase the amount of time they devote to water and firewood collection. This increased productivity of patients coupled with large decreases in the amount of time they spend seeking medical care leads to a reduced burden on children and other household members. We find evidence that boys and girls in treated patients' households devote less time to housework and other chores. These results suggest that the provision of ARV treatment generates a wide variety of benefits to households in resource-poor settings.     

Do funded pensions contribute to higher aggregate savings? A cross-country analysis

Do Funded Pensions Contribute to Higher Aggregate Savings? A Cross-Country Analysis.—In this paper we test the hypothesis that increases in funded pension wealth contribute to higher aggregate savings by employing a panel data set of ten countries over the 1982–1993 period. We develop a proxy for changes in funded pension wealth for this sample of countries based on pension fund asset data. Using this measure and controlling for other determinants of savings, we estimate the relationship between aggregate saving rates and changes in funded pension wealth. Our results suggest that the build-up of pension assets exerts a positive and statistically significant effect on aggregate saving rates, and that this impact differs for OECD and non-OECD countries. JEL no. E21, G23, O57     

Pension principles in the Swedish pension system

This article analyses the role of pension principles of funding and benefit provision for the development of the Swedish pension system. Focusing on four major public pension reforms in the twentieth century, it discusses why certain pension principles were used and under what circumstances they were more or less likely to change. The analysis shows that change was implemented to a large extent as a response to the previous pension system failing to fulfil its intended purpose in terms of financial stability, work incentives and redistribution.     

中国城镇居民储蓄率的影响因素:1997～2008——基于省级动态面板数据的实证研究

本文在生命周期-持久收入模型与预防性储蓄理论的框架内,使用1997～2008年的省级面板数据,通过动态系统广义矩的估计方法对中国城镇居民储蓄率的影响因素进行了实证研究。研究显示:持久收入的增加和储蓄惯性显著提高了城镇居民的储蓄率,并且以上两方面因素可以对1997～2008年间城镇居民储蓄率增幅中的大部分进行解释;但与传统的LC-PIH模型不同,少儿抚养比与中国城镇居民储蓄率之间存在着显著的正相关关系。此外,社会保障事业的发展通过降低不确定性,从而显著降低了城镇居民储蓄率,而就业的市场化程度却产生了与之相反的影响。但公共支出的结构、通货膨胀率以及实际利率没有对城镇居民储蓄率产生显著的影响。     

Why do migrant households consume so little?

Exploring data from the migrant and urban household surveys of the Chinese Household Income Project, this paper dissects the underlying causes of the depressing effect of the hukou system on migrant household consumption to two channels. On one hand, migrants' disentitlement to local urban hukou creates financial insecurity through barriers to employment, social welfare, medical insurance, etc., thereby encouraging precautionary saving. On the other hand, it promotes temporary migration, allows divergence in tastes and values from local urban residents to persist, and incentivizes migrant households to save their transitory income. Factors reflecting these two channels, such as medical and pension insurances, the duration of migration, and local homeownership, are specifically modeled, and they are found to contribute to the discrepancies in consumption between migrant and local urban households, among other factors. In addition, the marginal propensity to consume exhibits heterogeneity across migrant households; it is higher with a longer duration of migration, local homeownership, and self-employment. The lack of these attributes further reinforces the reluctance of migrant households to consume.     

Three stokvel clubs in the urban black township of KwaNdangezi,Natal

Academic studies have neglected the financial aspect of the informal economy. This article examines saving among the poor and their savings institutions (stokvels). The black community is disadvantaged in the financial market by having limited access to formal sources of finance. Stokvels are important in filling this gap. A planning priority for South Africa is adequate financial provision for all its people. In financing the reconstruction of the economy, policies for enhancing savings and redirecting them into investment will prove crucial.     

Stochastic Generational Accounting Applied to Reforms of Dutch Occupational Pensions

This paper examines stochastic or ‘value based’ generational accounting as a method to assess the intergenerational redistributive impact of pension reform. The analysis is applied to three policy changes to the regulation of Dutch occupational pensions during the years 2012 and 2013 that mark the transition from defined benefit pensions to ‘defined ambition’ pension schemes.     

Understanding High Saving Rate in China

This paper presents a detailed analysis of the Chinese saving rate based on the flow of funds data. It finds that the most widely adopted view of precautionary saving, which is regarded as the top reason for maintaining a high saving rate in China, is misleading because this conclusion is drawn from the household survey data. In fact, the household saving rate has declined dramatically since the mid‐1990s, as is observed from the flow of funds framework. The high national saving rate is attributed to the increasing shares of both government and corporation disposable incomes. Insufficient consumption demand is caused by the persistent decrease in percentage share of household to national disposable income. Government‐ directed income redistribution urgently needs to be improved to accelerate consumption, which in turn would make the Chinese economy less investment‐led and help to reduce the current account surplus. (Edited by Zhinan Zhang)     

降低我国居民储蓄率的制度性对策

在当前世界性金融危机背景下,过高的储蓄率会加重内需不足进而引致经济衰退,文章分析了我国居民储蓄率过高的制度性原因,并提出了相应对策。     

Household Saving in China: The Keynesian Hypothesis,Life‐Cycle Hypothesis,and Precautionary Saving Theory

We test the explanatory powers of Keynesian theory, the life‐cycle hypothesis, and the precautionary saving theory on household saving in China, based on data from 1990 to 2009 from 31 provinces and autonomous regions. The results show that the precautionary saving motivation explains household saving better than Keynesian theory. The study results also highlight the impact of life expectancy on China's household saving.