Pensions with endogenous and stochastic fertility

This paper studies the design of a pay-as-you-go social security system in an overlapping generations model where fertility is in part stochastic and in part determined through capital investment. If investments are publicly observable, pension benefits must be linked positively to the level of investment, and payroll taxes negatively to the number of children. The outcome is characterized by full insurance with all parents, regardless of their number of children, enjoying identical consumption levels. Without observability, benefits must increase, and payroll taxes decrease, with the number of children. The second-best level of investment, and the resulting average fertility rate, are less than their corresponding first-best levels.     

Optimal Pricing and Price-Cap Regulation in the Postal Sector

This paper studies the optimal price structure in the postal sector when worksharing is available (e.g., for collection, sorting and transportation) and when the operator faces a break-even constraint. Users differ in opportunity and cost to engage in worksharing. We determine the optimal worksharing discount and provide sufficient conditions (on demand functions) under which it exceeds the ECPR level. Furthermore, we show that the optimal prices can be implemented through a global price cap imposed on a weighted average of the prices of all products. The appropriate weights are proportional to the market demand (evaluated at optimal prices) of the corresponding products.     

SOCIAL SECURITY AND RETIREMENT DECISION: A POSITIVE AND NORMATIVE APPROACH*

Abstract Social insurance for the elderly is judged responsible for the widely observed trend towards early retirement. In a world of laissez‐faire or in a first‐best setting, there would be no such trend. However, when first‐best instruments are not available, because health and productivity are not observable, the optimal social insurance policy may imply a distortion on the retirement decision. The main point we make is that while there is no doubt that retirement systems induce an excessive bias towards early retirement in many countries, a complete elimination of this bias (i.e. a switch to an actuarially fair system) is not the right answer for two reasons. First, some distortions are second‐best optimal. This is the normative argument. Second, and on the positive side, the elimination of the bias might be problematic from a political perspective. Depending on the political process, either it may not be feasible or alternatively it may tend to undermine the political support for the pension system itself.     

The need for a policy of regionalisation

“Possibilities of a regional structural policy in industrial states as demonstrated by the example of the Federal Republic of Germany.” This was the subject of the main lecture which Senator Kern delivered on Dec. 20, 1972, in the course of his tour of Japan in Tokio at the Keidanren, the most influential of Japanese business organisations. The Senator’s lecture provoked a lively discussion in which 30 leading members of the Japanese business world participated.     

Who are Those Misclassified As ‘Others’? A Note on Indonesian Labour Force Statistics 1

This paper examines possible kinds of misclassification of those placed in the large ‘others’ group in Indonesian labour force statistics, i.e. people registered as outside the labour force and neither attending school nor homemaking. It argues that a large proportion of those classified as ‘others’ are unemployed, unpaid workers and people attending informal education, as well as those in transition between two educational institutions. The paper discusses possible reasons for the remarkable differences between Census and labour force surveys in the reported size of the ‘others’ group, and considers the consequences for statements on trends in open unemployment if adjustment is made for the high ‘others’ share.