OECD pension reform: The role of demographic trends and the business cycle |
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Affiliation: | Amsterdam School of Economics, University of Amsterdam, PO Box 15867, 1001 NJ Amsterdam; Netspar; Tinbergen Institute, Netherlands |
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Abstract: | Using a new real-time dataset from Beetsma et al. (2020) containing all pension reform measures in 23 OECD countries between 1970 and 2017, we demonstrate that, in contrast to what one might a priori expect, the timing of pension reform measures coincides with business cycle shocks and not with current or projected demographic shocks. The OECD-wide demography only explains the general reform trend. We rationalize this finding using a political-economy model with two-sided adjustment costs to explain a lack of response of pension reform measures to changes in demographic indicators. |
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Keywords: | Pension reform measures Narrative identification Expansion Contraction Old-age dependency ratio Business cycle indicators Adjustment costs H55 H62 J11 J26 |
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