Forced Saving,Redistribution, and Nonlinear Social Security Schemes

This paper studies the design of nonlinear social security schemes when individuals differ in productivity and in their degree of myopia. Myopic individuals may not save “enough” for their retirement. The welfare function is paternalistic: The rate of time preference of the farsighted is used for both types. We show that the solution does not necessarily imply forced savings for the myopics: Paternalistic considerations are mitigated by incentive effects. Numerical results suggest that as the proportion of myopic individuals increases, there is less redistribution and more forced saving, and the desirability of social security increases.     

Voting on Pensions with Endogenous Retirement Age

It is often argued that the observed trend towards early retirement is due mainly to the implicit tax imposed on continued activity of elderly workers. We study the relevance of such a distortion in a political economy model with endogenous age of retirement. The setting is a two-period overlapping generations model. Individuals differ in their productivity. In the first period they work a fixed amount of time; in the second, they choose when to retire and then receive a flat rate pension benefit. Pensions are financed by a payroll tax on earnings in the first and in the second period of life. Such a tax is non distortionary in the first period; it is distortionary in the second period. We allow for some rebating of the second period tax. Individuals vote on the level of the payroll tax given the rebate which can range from 0 (biased system) to 100% (neutral system). We provide sufficient conditions for the existence of a voting equilibrium and study its properties. Under these conditions, high tax rates are supported by all the old and by low productivity young individuals. We show that the pivotal voter is a young individual. The number of young individuals who have higher wage than the pivotal voter equals half the total population. We also show that the introduction of a bias increases the political support for the pension system. Finally, we study the simultaneous determination of the bias and the tax rate through a voting procedure and show that the equilibrium (if any) implies a bias which is always positive and may or not be larger than one.     

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.     

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.     

Managing Corporate Portal Usage with Recommender Systems

Corporate portals are supposed to support a company’s business model and to increase productivity of the employees. However, the productivity gain that can be achieved by corporate portals is often undermined because the users of the portal are not sufficiently informed about the portal’s capabilities. This is of particular concern for large corporate portals whose service portfolio is constantly evolving and to which new users are added frequently. In the article, we propose a recommender system for corporate portals in order to increase service awareness and usage. Following the design science methodology, a suitable recommender concept is developed and several implementation options are evaluated in a field experiment at one of Germany’s largest companies. It is found that the recommender system increases the number of newly visited services as well as the number of newly used services in the corporate portal by about 20 %.     

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.     

Watch What You Say: Job Applicants’ Justice Perceptions From Initial Organizational Correspondence

Although it is a common practice for organizations to communicate with job seekers following application submission, little is known about how applicants react to this correspondence. Drawing from recruitment and organizational justice theories, we explore the possibility that specific correspondence content influences job seekers’ fairness perceptions. Data collected from 119 actual job applicants indicated that providing relevant information about the recruitment process (information adequacy) positively related to informational and interpersonal justice perceptions. However, delivering this information in an interpersonally sensitive manner (information sensitivity) had a stronger impact on interpersonal justice perceptions. Finally, post hoc analyses suggested that incorporating specific content delivered in initial job applicant correspondence could allow recruiting organizations to develop practical, cost‐effective strategies for enhancing job seekers’ fairness perceptions following their application submission. © 2014 Wiley Periodicals, Inc.     

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.     

Trading volume and firm-specific announcements: Implications for the market model

The market model is commonly used in finance to study events and to evaluate security performance. With daily data, it is not uncommon to find low R-squares, in the range 0–10%. Prior studies have attempted to improve the fit of the model by excluding observations associated with high trading volume. In this study, we compare the results of the high-volume-exclusion approach with the more direct firm-specific announcement exclusion approach. The announcement approach excludes observations associated with Wall Street Journal Index news items regarding the firm. By excluding the [−1,0] fays relative to such news in a sample of 68 firms, we find that R-squares increase significantly by about 5%. By excluding the days relative to earnings announcements only, R-squares increase by about 4%. These results are then compared to the high-volume-exclusion approach. It is found that this approach is more efficient as an 8% increase in R-squares is produced.The results of this study provide valuable evidence to empiricists by comparing the two approaches to improving the fit of the market model. The high-volume -exclusion approach provides higher R-squares. However, the relative efficiency of the two approaches should be balanced against the arguments for the methodologically correct approach. The advantage of using the firm-specific announcement exclusion approach is that there is more confidence of excluding only firm-specific movements from the estimation of the market model. It also allows a researcher to quickly and unambiguously identify the announcements and delete the corresponding observations. Furthermore, we find that about 50% of the improved fit, relative to the volume approach, can be accomplished by excluding earnings announcements. The methodological disadvantage of using the high-volume-exclusion approach is that it is affected not only by firm-specific announcements but also by other factors, such as the heterogeneity of investor expectations. These factors may influence the choice of using firm-specific announcements rather than the high-volume approach despite the lower increment in R-squares.