Social security and two-earner households

In the past decades, elimination of the pay-as-you-go system in U.S. has been extensively discussed and studied. Such an elimination would also eliminate the intragenerational redistribution done by the following policies of social security. Due to spousal and survivor׳s benefit provisions, US Social Security system redistributes (mostly) to single-earner married households. Since retirement benefits are a concave function of past mean earnings, the system redistributes from high earners to low earners. Finally, existence of a cap on social security taxable earnings makes the system regressive. This paper quantifies redistributive, labor supply, and welfare implications of these policies using a general equilibrium life-cycle model. Agents start out as permanently married or single and with education levels and wage profiles, where the latter depend both on education and gender. The household is the decision maker and decides on labor supply of its member(s) and saving. Elimination of these policies results in a 5.5% rise in labor force participation of married females, while increasing aggregate welfare by 0.4%. A majority of households experience positive gains in welfare. Single-earner married households incur large welfare losses (as big as 1.1%), whereas two-earner households with high skilled spouses experience substantial welfare gains (as big as 1.9%).     

The political economy of environmental and social security policies: the role of environmental lobbying

Social security provides retirement benefits to the old at the expense of the working young, while environmental investment benefits the future of the young at the expense of the old. This paper presents a model incorporating this intergenerational conflict on public spending and considers the political determination of environmental investment and social security by focusing on the Markovian political equilibria. It is shown that (1) the political equilibria are generally inefficient, and (2) the introduction of environmental lobbying into politics may improve environmental quality but degrade lifetime utility in the long run.      

Poland: the reform of the pension system

The paper presents the system of social security provision introduced in Poland after World War II and discusses the demographic, political and economic reasons for its failure, as well as its impact on the Polish economy. The proposed reform scenarios from two major political proponents, the Ministry of Finance and the Ministry of Labour and Social Policy, are described. The recently finalised reform proposal is now being introduced, starting with the Polish Parliament (Sejm) passing a package of three acts concerning the split of the current pay-as-you-go single system into a pillar system, with provisions made for a transition period. The paper outlines the proposed changes, including the new role of the Social Security Institution (ZUS) in Poland, the structure of the first pillar of benefits and the opportunities for private companies to participate in the social security provision through the second and third pillars.     

The importance of financial incentives on retirement choices: New evidence for Italy

This study exploits a new dataset to quantify the effect of financial incentives on retirement choices. This dataset contains—for the first time for Italy—information on seniority. The effects of marginal incentives and social security wealth (SSW) on retirement go in the expected direction; when employees become eligible for pension benefits, the change in financial incentives they experience is so great that their retirement probability increases by 30 percentage points.We also find that the procedure used in previous Italian studies to impute seniority leads to a considerable overestimation of that variable and of SSW. We show that, due to these measurement errors, the estimate of the SSW coefficient takes the wrong sign. A comparison of retirement studies across countries (see Gruber and Wise [Gruber, J., and Wise, D., (2004). Social Security Programs and Retirement Around the World: Micro-Estimation, NBER. The University of Chicago Press, Chicago and London.]) provides prima facie evidence that a lack of good quality data often leads to wrongly signed estimates of the SSW coefficient.     

Social Security and elderly labor supply: Evidence from the Health and Retirement Study

This study uses panel data from the Health and Retirement Study (HRS) to estimate the effects of Social Security income on elderly labor supply in the 1990s and early 2000s. The identification strategy takes advantage of the 1977 amendments to the Social Security Act, which led to a large, unanticipated reduction in Social Security benefits for those born after January 1, 1917. Despite the advanced age of the notch cohorts, there is a significant, negative and surprisingly elastic relationship between Social Security income and hours of work. This suggests that currently proposed reductions in benefits would induce Social Security recipients to work more hours in retirement, even through their 70s and early 80s.     

Indirect Convertibility,Equity‐Based Banking and Financial Stability

Banking reform proposals put forward in the wake of the recent financial crisis maintain that equity‐based banking would be stable and would prevent bank runs. This article argues that complementing this form of banking with an indirect convertibility monetary standard and thereby dispensing with base money would enhance financial stability further. Banks would not hold a distinctive asset (base money) that would be called upon by customers at short notice, thereby removing the possibility of bank runs. No discrepancy in value between the two sides of a bank's balance sheet would arise as its assets (securitised loans) would be marked to market. Unlike other recent contributions, the intermediation model outlined here is not ‘limited purpose’ in nature as banks would not be restricted in the form of lending activity they can pursue. Common sources of banking and financial instability – liquidity risk, solvency risk, moral hazard – would be absent.     

Economic growth,volatility and their interaction: What’s the role of finance?

This paper examines the relation between financial depth and the interaction of economic growth and its volatility. We use a sample of 52 countries for the period 1980–2011, and our main finding is that, at moderate levels of financial depth, further deepening increases the ratio of average growth to volatility; however, as financial depth increases, this relation reverts, and the rise in volatility overcomes that of economic growth. This result is obtained both in the medium and long run; however, the peak of the relation seems to be lower in the medium run (around 40%–55% of domestic credit/GDP) than in the long run (around 75%–99%). This suggests that increasing the level of domestic credit may intensify relative volatility in the medium term, but still raise relative long-term growth before the long-run threshold is achieved.     

The anatomy of trade union benefits in the 1960's

Pre-1914, average union expenditure per head on benefits almost equalled the average wage; today it is only one-twentieth of average earnings. In analysing the trends in benefit patterns, the authors discuss such factors as the low level of expenditure on unemployment benefit, the rising trend of dispute benefit in the 1960's, the run down of superannuation benefits, and the increase in expenditure on sickness and accident, and the increase in contributions to educational programmes. They also consider probable future developments.     

A dynamic econometric model of agricultural wage determination in Bangladesh

Economists applied data from 1949-1950 and 1980-1981 to a new dynamic model to examine the dynamics of determinants of agricultural wages in Bangladesh, particularly the effect of changes in relative prices of rice (the staple food) and productivity. Just a 20% rise in the price or rice was passed on in the agricultural wage rate within the current year. About 50% was passed on in the long run, however. Therefore an increase in the price of rice reduced the rice purchasing power of agricultural wages in the short and long term. In fact, the importance given to rice in the long run real wage rate was almost the same as the mean proportion of expenditure that an agricultural laborer in Bangladesh committed to rice and closely related food staples. Thus arise in the price of rice in comparison to other goods had limited effects on the long run real wage in terms of the bundle of goods typically consumed, but very adverse effects in the short run placing a high burden on the rural poor. On the other hand, the long run real wage rate fell considerably between the mid 1960s-early 1980s when overall agricultural productivity increased. The economists pointed out that this increased productivity may not have lowered long run real wage rates, but instead mitigating factors may have contributed to this fall. For example, population growth, rising landlessness, and insufficient economic growth in nonagricultural sectors resulted in a consistent growth in the labor supply. In conclusion, this new dynamic model showed that Bangladesh cannot depend only on agricultural growth to reduce the poverty of farmers.     

社保基金偿付能力风险理论分析与实证检验

欧盟针对保险公司偿付能力实行的新政"Solvency Ⅱ"已经开始在欧盟范围内运行,由此掀起了全球商业保险与社会保险偿付能力风险的变革,以抵御国际金融危机给保险业带来的巨大威胁。我国社保基金管理由于在资金来源和运营管理上与欧盟国家存在很大区别,且国内学者还没有高度重视偿付能力风险问题。因此,从理论上对社保基金偿付能力风险进行概念界定,提出相关指标体系,并结合社保基金收入与支出的时间序列建立ARMA模型,对偿付能力风险进行预测具有重要意义。这对充实社保基金风险管理理论,为相关管理机构提供更加合理的偿付能力风险管理方法,保护全体参保人的权利,降低国家的财政压力有一定的帮助。     

Assessing the efficacy of rational budgeting approaches: fiscal recovery planning and municipal budgetary solvency

ABSTRACT

This study assesses the effects of financial recovery planning on the budgetary solvency of US cities. Budgetary solvency is the ability of governments to meet their service responsibilities and other financial obligations in a fiscal year. Financial recovery planning, which is based on rational decision-making theory, is designed to help cities recover from fiscal stress by facilitating diagnosis of fiscal problems, and the implementation of short- and long-term fiscal recovery strategies. Using data from a national survey of cities and multi-year audited financial reports, the results of the regression analyses show that planning is associated with stronger budgetary solvency, but its effectiveness varies across cities. Specifically, planning helps majority of fiscally struggling cities, but not those facing extreme fiscal decline.     

Book reviews

Books reviewed: Jeremy Waddington and Reiner Hoffmann (eds), Trade Unions in Europe. Facing Challenges and Searching Solutions World Labour Report 2000: Income Security and Social Protection in a Changing World Peter Stalker, Workers Without Frontiers: The Impact of Globalization on International Migration     

How are pension integration and pension benefits related?

Pension integration is the ability to allow differentiated pension benefits across earnings groups. In the academic literature, it is often described as a way for firms to reduce pension benefits (and therefore costs). Justified by the requirement that firms pay half of Social Security payments, integrated pensions are typically found to reduce benefits for lower income workers. Data on retirees from the Health and Retirement Study, however, reveal a more complex picture where some individuals receive more benefits when one of their pension plans is integrated, ceteris paribus. Some reasons are discussed why this might be the case.     

中国建筑整体上市的动机及其经济后果——基于收购深圳中海案例分析

以中国建筑收购深圳中海为例，用资本市场股价和财务指标来研究中国建筑整体上市的经济后果。研究发现，从收购公告的市场反应来看，中国建筑累计超常收益率跑赢了内地市场，却跑输了香港市场；从财务指标变动趋势发现，其盈利能力稍有下降，成长能力稳定，营运能力下降，偿债能力较高，财务风险暂不稳定，从长期来看会创造价值。最后，为中国建筑的产融结合提出相应对策。     

How low can U go?

• ? Although there is growing evidence that wage growth is building in response to low and falling unemployment in the advanced economies, there is scope for unemployment rates to fall further without triggering a pay surge.
• ? For a start, current unemployment rates in comparison to past cyclical troughs overstate the tightness of labour markets. Demographic trends associated with the ageing ‘baby boomer’ bulge have pushed down the headline unemployment rate – unemployment rates among older workers are lower than those of younger cohorts. And in a historical context, Europe still has a large pool of involuntary part‐timers.
• ? In addition, rising participation rates mean that demographics are less of a constraint on employment growth than widely assumed. In both 2017 and 2018, had it not been for increased activity rates (mainly for older cohorts), unemployment would have had to fall more sharply to accommodate the same employment increase. We expect rising participation rates to continue to act as a pressure valve for the labour market.
• ? Finally, unemployment rates were generally far lower during the 1950s and 1960s than now. If wages stay low relative to productivity, as was the case during that prior era, employment growth may remain strong, with unemployment falling further. In the post‐war era, low wages were partly a function of a grand bargain in which policy‐makers provided full employment in return for low wage growth.
• ? There is evidence to suggest that many post‐crisis workers have opted for the security of their existing full‐time job and its associated benefits despite lower wage growth, rather than change job and potentially earn more; the rise of the ‘gig economy’ has led some workers to value what they already have more. Put another way, the non‐accelerating inflation rate of unemployment (NAIRU) has fallen. So, the role of labour market tightness in pushing wage growth higher may continue to surprise to the downside.

     

The Vermont Land Gains Tax Experience With It Provides a Useful Lesson in the Design of Modern Land Policy

Abstract . Vermont is currently the only state which employs a special capital gains tax on certain land sales. A comparison between the Vermont land gains tax and Henry George's Single Tax provides a useful lesson in the design of modern land policy. The Vermont tax is aimed at discouraging short run land speculation, while the Single Tax seeks to discourage the long term quasimonopoly of land ownership. The Single Tax would capture unearned increments to land value while the Vermont tax applies only to realized capital gains and tends to reward long term speculators. An empirical analysis of the Vermont tax reveals that tax revenues have been small, and that the tax has not prevented a rise in land values. In fact, the Vermont tax may have increased land prices by restricting available land supply. Although the Vermont tax intended to curb speculation and reduce land subdivision activity, it is not a substitute for land use planning and carefully designed growth control ordinances and regulations.     

A Critique of the Orthodox Approach to Indonesia's Growth and Employment Problems and Post Keynesian Alternatives

Indonesia continues to bear the scars of the 1997 financial crisis, with the highest open unemployment rate in Southeast Asia. The orthodox interpretation is that the post‐crisis era is typified by overly generous labor legislation granting higher minimum wages and other provisions; the rise in real wages adversely impacted the investment climate and employment growth. However, detailed sectoral analysis reveals very little evidence of a wage‐driven profit squeeze. This article contends that Indonesia's current unemployment woes are best understood as the reflection of a demand‐constrained economy, where important sectors are operating at around 70 percent of their capacity. It, thus, outlines an alternative macroeconomic policy framework in the Post Keynesian tradition.     

Analysis of the practice of job evaluation in the metal industry in Turkey

Job evaluation's main aim is to establish a fair wage structure. Its main principle is ‘equal pay for equal work’. ‘Metal Industry Job Grouping System’ (MIDS) has been in the metal industry in Turkey for more than 20 years. The results of the practice of the system were measured by the Gini coefficient. By the findings, the average wages of the job groups are different enough from each other by their job groups in the way the wage of the bigger number job group is higher than the smaller except the job group two in the industry. However, the wages are far from the principle ‘equal wage for equal job’ within the same job itself. In addition, the workers make use of bonuses and social benefits. The effect of social benefits of them on the wage structure is positive within the same job group and negative between different job groups within the same company. Nevertheless, the effect of both bonuses and social benefits on the wage structure is negative between the companies because, between them they are different from each other. Job group and seniority affect the wage structure. Seniority has a socio-psychological self-producing dynamic. The distribution of seniorities within the same job group has negative effects on the wage structure. However, this fact for each worker disappears for the long term since the worker of today who has short-term seniority will be the one of tomorrow who has long-term seniority. Therefore, for each worker, the wage structure gets closer to the principle ‘equal wage for equal job’ within the same job group itself over time.     

Habit formation and wage determination

We analyse the implications of habit formation relating to wages in a multiperiod efficiency‐wage model. If employees have such preferences, their existence provides firms with incentives to raise wages and reduce employment over time. Greater intensity does not necessarily have the same consequences, because wage adjustments counteract the initial level impact. The firm's response additionally depends on the wage dependency of dismissal costs, because such costs make an increasing wage profile over time more attractive and mitigate the effects of greater intensity of habit formation. We further show that short‐lived productivity shocks have long‐lasting wage and employment consequences. Moreover, habit concerns by firm owners reduce wages.     

Tighter labour markets to finally lift global wages

• Wage growth has been relatively slow since 2007 in advanced economies, but an upturn may be in sight. Slow productivity growth remains an issue but tighter labour markets make a positive response by wages to rising inflation more likely and there are signs that compositional and crisis‐related effects that dragged wage growth down are fading – though Japan may be an exception.
• Overall, our forecasts are for a moderate improvement in wage growth in the major economies in 2017–18, with the pace of growth rising by 0.5–1% per year relative to its 2016 level by 2018 – enough to keep consumer spending reasonably solid.
• Few countries have maintained their pre‐crisis pace of wage growth since 2007. In part this reflects a mixture of low inflation and weak productivity growth, but other factors have also been in play: in the US and Japan wage growth has run as much as 0.5–1% per year lower than conventional models would suggest.
• The link with productivity seems to have weakened since 2007 and Phillips curves – which relate wages to unemployment – have become flatter. A notable exception is Germany, where the labour market has behaved in a much more ‘normal’ fashion over recent years with wage growth responding to diminishing slack.
• ‘Compositional’ factors related to shifts in the structure of the workforce may have had an important influence in holding down wage growth, cutting it by as much as 2% per year in the US and 1% per year in the UK. There are some signs that the impact of these effects in the UK and US are fading, but not in Japan.
• The forecast rise in inflation over the next year as energy price base effects turn positive is a potential risk to real wages. But the decline in measures of labour market slack in the US, UK and Germany suggests wages are more likely to move up with inflation than was the case in 2010–11 when oil prices spiked and real wages fell.