Quantifying mortality risk in small defined-benefit pension schemes

A risk of small defined-benefit pension schemes is that there are too few members to eliminate idiosyncratic mortality risk, that is, there are too few members to effectively pool mortality risk. This means that when there are few members in the scheme, there is an increased risk of the liability value deviating significantly from the expected liability value, as compared to a large scheme. We quantify this risk through examining the coefficient of variation of a scheme's liability value relative to its expected value. We examine how the coefficient of variation varies with the number of members and find that, even with a few hundred members in the scheme, idiosyncratic mortality risk may still be significant. Next we quantify the amount of the mortality risk concentrated in the executive section of the scheme, where the executives receive a benefit that is higher than the non-executive benefit. We use the Euler capital allocation principle to allocate the total standard deviation of the liability value between the executive and non-executive sections. The results suggest that the mortality risk of the scheme should be monitored and managed within the sections of a scheme and not only on a scheme-wide basis.     

When east meets south: economic gains from India-APEC trade

As India, potentially one of the largest economies in the world, seeks membership to the Asia Pacific Economic Cooperation forum (APEC), a case for its inclusion in an expanded APEC is examined. The methodology and empirical design as developed in Marwah and Klein (1995) within the framework of a world trade matrix consists of seven regions divided into India, components of APEC, and the rest of the world. The growth of economic cohesiveness within APEC between 1965 and 1995 is quantitatively assessed by patterns of trade linkages through measures of bilateral reciprocity, multilateralism, and market diversification. Entropy indexes of the trade matrix are computed and used in the analysis. Since 1991, when massive economic reforms were implemented, India has experienced strong growth in exports and in imports, a departure from its previous performance. Furthermore, its external orientation has shifted positively and significantly since the reforms. Despite this, during the latest five years, India's integration with APEC hadn't changed to a level of statistical significance. The case for an expanded APEC, including India, is still somewhat prospective but the evidence is growing that it could prove beneficial to all the member countries. For India to benefit in this expanded APEC, it should continue to press its case for inclusion in the Asia Pacific Economic Cooperation forum (APEC).     

An Integrated Modular Approach to Teaching Introductory Economics

The authors describe the design and administration of a large two-semester course in principles of economics that permits both students and faculty some choice of both subject matter and meeting times during the semester. Students complete a standardized nine-week core and are then allowed to select topical modules. Advantages and disadvantages are discussed.     

Changes to Income Trust Taxation in Canada: Investor Reaction and Dividend Clientele Theory

Abstract:  This paper explores the relationship between tax-induced dividend clientele theory and the recent changes to the taxation of income trusts in Canada. On October 31, 2006, the Canadian government announced the Tax Fairness Plan ( TFP ) calling for the elimination of the considerable tax advantage enjoyed by income trusts. Generally, distributions from income trusts are now taxed at rates comparable to those imposed on corporate dividends. We examine market reaction to the  TFP  to address three issues: first, whether the valuation effect of a dividend tax increase is consistent with the traditional or the new view of dividend taxation; secondly, whether the market reaction to tax increases has a differential impact on firm value that is related to the tax preferences of taxable, tax-exempt, and foreign investor tax clienteles; and thirdly, whether firms change their dividend policies in response to the preference of institutional investors (tax-based dividend policy effect) or whether institutional investors are sorting themselves across firms based on their dividend policies (investor sorting effect). Our results provide strong evidence as follows. First, the valuation effect in reaction to the  TFP  announcement is consistent with the traditional view of dividend taxation – i.e. that taxes on dividends reduce the net return to investors, increase the firm's cost of capital and lower the firm's ability to access capital markets, thereby discouraging investment and savings. Secondly, we saw that trusts with a larger percentage of their units held by tax-exempt, low-tax, and foreign investors had a higher decline in value when compared with trusts held mostly by ordinary taxable investors. These results support dividend tax clientele theory. Finally, we observed changes in institutional investor clienteles consistent with the investor sorting effect.     

Disrupted work: home‐based teleworking (HbTW) in the aftermath of a natural disaster

Natural disasters disrupt the nature of work, promoting an urgent review of where work is performed. Home‐based telework (HbTW), a common form of telework, is increasingly promoted as a means to ensure continuity of operations in an emergency situation. While widely advocated, little is known of the challenges and outcomes of HbTW when employed in disaster situations. This article explores the organisational and employee experiences of HbTW in the aftermath of a disaster, drawing on data from over 240 public sector workers and their managers who worked from home following a series of earthquakes in Christchurch, New Zealand. Findings point to critical factors shaping the experiences and outcomes of HbTW in disaster situations. Significant variation in the experiences and perceptions of HbTW for team leaders highlights their pivotal role and heightened pressures to maintain control in complex disaster situations.     

Careers and temporal flexibility in the new economy: an Anglo‐Dutch comparison of the organisation of consultancy work

Knowledge workers are widely considered to represent the vanguards of a new employment era, characterised by a greater degree of balance in the relationship between the employer and the knowledge worker. This fundamental shift in power relations is expected to lead to the emergence of a new group of so‐called ‘free’ or empowered portfolio workers, who share boundaryless career arrangements and internationally ‘universal’ forms of flexibility. However, such propositions have been made without extensive comparative research. This paper therefore examines the organisation of knowledge worker careers and the nature of the temporal flexibility available to knowledge workers through an Anglo‐Dutch case‐study of a multinational consultancy firm. The data collected by this study provides little evidence to support the notion of free/boundaryless career models and demonstrates that national context has a significant impact on the construction of consultancy careers and the availability, level and form of flexibility offered to consultants.     

Creating national parks — ‘a grand, good thing?’

Peter Donnelly of McMaster University, Hamilton, Canada, discusses some unintended consequences of creating national and countryside parks. The poor representation of the general public in decision making and determination of appropriate use of parks, coupled with the distinction between publicly-owned and privately-owned land, means that untrammelled countryside recreation becomes the prerogative of the wealthy.     

The integration of film‐induced tourism and destination branding in Yorkshire,UK

This paper identifies the integration of film induced tourism and destination branding on destinations featured in television series' such as Yorkshire, which is the film location for many popular English television series'. The review of the existing literature identified a gap in previous investigations and in response, a tourist survey and strategic conversations with the key stakeholders were an initial attempt to fill this gap. The issues which arose from these and the literature review highlighted some implications for the future development of these destinations, namely the use of destination branding in the promotion of a film location. Copyright © 2008 John Wiley & Sons, Ltd.