The impact of changes in second pension pillars on public finances in Central and Eastern Europe: The case of Poland

This paper studies the impact of the recent weakening of Poland's fully funded defined contribution second pension pillar on (i) the long-term sustainability (the deficit and implicit debt) of the full pension system and (ii) the implications for pension benefits (gross replacement rates). Simulation results, based on a stylised version of the Polish pension system, show that, in the baseline scenario, the weakening of the second pillar would permanently lower future pension system debt, chiefly as a result of a cut in replacement rates. But using a combination of pessimistic assumptions including strong population ageing, low real wage growth and an indexation of existing pension benefits on nominal wage growth rather than inflation coupled with bringing in tax expenditures related to the third voluntary pension pillar and an increase in the share of minimum pensioners leads to higher pension system deficits and eventually more public debt at a very long horizon. The simulation results also suggest that if Poland had not transformed its pay-as-you-go first pension pillar into a defined contribution from a defined benefit system, the weakening of the second pillar would deteriorate fiscal sustainability relatively quickly in the baseline scenario. This result suggests that the Hungarian pension reversal would reduce deficit and debt only temporarily, mainly because of Hungary's costly defined benefit first pension pillar: the weakening of the second pillar is tantamount to swapping low current replacement rates (in the defined contribution second pillar) against high future replacement rates in the defined benefit first pension pillar.     

Financial Regulation,Financial Globalization,and the Synchronization of Economic Activity

We analyze the impact of financial globalization on business cycle synchronization using a proprietary database on banks’ international exposure for industrialized countries during 1978 to 2006. Theory makes ambiguous predictions and identification has been elusive due to lack of bilateral time‐varying financial linkages data. In contrast to conventional wisdom and previous empirical studies, we identify a strong negative effect of banking integration on output synchronization, conditional on global shocks and country‐pair heterogeneity. Similarly, we show divergent economic activity due to higher integration using an exogenous de‐jure measure of integration based on financial regulations that harmonized EU markets.     

Employment and education discrimination against disabled people in Cape Verde

This article assesses the employment and school enrolment gaps between disabled and nondisabled persons using the last Cape Verdean census. The unexplained part of these gaps accounts for most of them, whatever the age group considered. Furthermore, differences in age structures between disabled and nondisabled persons have almost no effect on these gaps. Taking into account potential misclassification errors in the disability variable seems to change only marginally these results. These findings thus suggest that there is scope for programs to better target and promote employment and education of the disabled in Cape Verde.     

Wage Structure and Dynamics in the Electronics Industry

This study analyzes wage patterns over time among California electronics employers. While the range of wages paid is substantial, employers on average make only small departures from market wage that are not pervasive across occupations or persistent across time. Employers appear able to change employment levels without affecting wages. Internal wage relativities also appear flexible. Differences between administered wage scales and actual wages paid are used to distinguish wage policy from market outcomes.     

Web‐Based Disclosure About Value Creation Processes: A Monitoring Perspective

Adopting a monitoring perspective, this study aims to explain how and why firms provide web‐based disclosure about their value creation and its underlying processes. We rely on the balanced scoreboard approach to measure disclosure. Our results suggest that costs incurred by capital markets' participants as well as monitoring by the board and the media drive disclosure. Moreover, we argue and document that a firm's disclosure is actually a part of its governance configuration and influences some board processes.     

Why Do Foreign Firms Leave U.S. Equity Markets?

Foreign firms terminate their Securities and Exchange Commission registration in the aftermath of the Sarbanes–Oxley Act (SOX) because they no longer require outside funds to finance growth opportunities. Deregistering firms’ insiders benefit from greater discretion to consume private benefits without having to raise higher cost funds. Foreign firms with more agency problems have worse stock‐price reactions to the adoption of Rule 12h‐6 in 2007, which made deregistration easier, than those firms more adversely affected by the compliance costs of SOX. Stock‐price reactions to deregistration announcements are negative, but less so under Rule 12h‐6, and more so for firms that raise fewer funds externally.