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E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 3, No. 9: May 9, 2002
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Publisher: LSN Employment, Labor, Compensation & Pension Journals
a division of
Social Science Electronic Publishing, Inc. (SSEP)
and Social Science Research Network (SSRN)
Editor: PAMELA PERUN
Urban Institute
Mailto:pamela@planetnow.com
Copyright: SSEP, Inc. 2002. All rights reserved.
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Topic of This Issue:
Preparing for Retirement
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T A B L E of C O N T E N T S
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NEW and FORTHCOMING ARTICLES
"Pension Participation: February 2001"
EBRI Notes, Vol. 22, No. 12, December 2001
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
WORKING PAPERS
"Social Security, Pensions and Retirement Behavior Within the
Family"
ALAN L. GUSTMAN
Dartmouth College
Department of Economics
National Bureau of Economic Research (NBER)
THOMAS STEINMEIER
Texas Tech University
Department of Economics
National Bureau of Economic Research (NBER)
"The Role of Information and Social Interactions in Retirement
Plan Decisions: Evidence from a Randomized Experiment"
ESTHER DUFLO
Massachusetts Institute of Technology (MIT)
Department of Economics
Centre for Economic Policy Research (CEPR)
National Bureau of Economic Research (NBER)
EMMANUEL SAEZ
Harvard University
Department of Economics
National Bureau of Economic Research (NBER)
"The Measure of Man and Older Age Mortality: Evidence from the
Gould Sample"
DORA L. COSTA
Massachusetts Institute of Technology
National Bureau of Economic Research (NBER)
"The Intergenerational State: Education and Pensions"
MICHELE BOLDRIN
University of Minnesota
Department of Economics
Centre for Economic Policy Research (CEPR)
Universidad Carlos III de Madrid
Department of Economics
ANA MONTES
Universidad de Murcia
Departamento de Fundamentos del Analisis Economico
"Shrinking Labor Forces and Early Retirement"
TRYGGVI THOR HERBERTSSON
University of Iceland
Institute of Economic Studies
"Longevity and Life Cycle Savings"
DAVID E. BLOOM
Harvard University
School of Public Health
National Bureau of Economic Research (NBER)
DAVE CANNING
Queen's University of Belfast
BRYAN S. GRAHAM
Harvard University
Department of Economics
S S R N I N F O R M A T I O N
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Benefits, Compensation & Pension Law we do not referee working
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Pension Participation: February 2001"
EBRI Notes, Vol. 22, No. 12, December 2001
BY: CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=296999
Contact: CRAIG COPELAND
Email: Mailto:copeland@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6356
Fax: 202-775-6312
Note: The PDF for the above title also contains the full text
of another December 2001 EBRI Notes article abstracted
on SSRN: "Income of the Elderly Population."
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
This article examines February 2001 Current Population Survey
(CPS) data for workers' participation in employment-based
pension plans. The percentage of workers ages 21-64
participating in a plan was found to be 54.8 percent in 2001, up
from 51.0 percent in 1995. Furthermore, workers with different
characteristics were found to have different probabilities of
participating in a pension plan. In particular, male, white,
older, full-time, and public sector workers were more likely to
have participated. Finally, the percentage of those not
participating by choice (relative to not being eligible) when
working for an employer that sponsors a plan increased
significantly from 25.1 percent in 1995 to 31.1 percent in
2001.
Keywords: Employment-based benefits, Pension plan
participation
JEL Classification: J33
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W O R K I N G P A P E R Abstracts
_________________________________________________________________
"Social Security, Pensions and Retirement Behavior Within the
Family"
BY: ALAN L. GUSTMAN
Dartmouth College
Department of Economics
National Bureau of Economic Research (NBER)
THOMAS STEINMEIER
Texas Tech University
Department of Economics
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=299816
Paper ID: NBER Working Paper No. W8772
Date: February 2002
Contact: ALAN L. GUSTMAN
Email: Mailto:alan.l.gustman@dartmouth.edu
Postal: Dartmouth College
Department of Economics
6106 Rockefeller Center
Hanover, NH 03755 UNITED STATES
Phone: 603-646-2641
Fax: 603-646-2122
Co-Auth: THOMAS STEINMEIER
Email: Mailto:Thomas.Steinmeier@TTU.EDU
Postal: Texas Tech University
Department of Economics
Lubbock, TX 79409-2101 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
This paper estimates a structural model of family retirement
using U.S. data from the Health and Retirement Study (HRS) and
from the National Longitudinal Survey of Mature Women. Estimates
using the HRS benefit from having, for each spouse, earnings
histories provided by the respondent and the Social Security
Administration, and employer provided pension plan descriptions.
We find that a measure of how much each spouse values being able
to spend time in retirement with the other accounts for a good
portion of the apparent interdependence of the retirement
decisions of husbands and wives. When we include this measure,
the simulations almost double the frequency of predicted joint
retirements. Once estimated, we use the model to investigate the
labor supply effects of alternative social security policies,
examining the effect of dividing credit for earnings evenly
between spouses, or of basing social security benefits on the
amounts accumulated in private accounts. Both policies change
the relative importance of spouse and survivor social security
benefits within the household and both raise the relative reward
to work later in the life cycle. The incentives created are
modest, and retirement responds accordingly. Nevertheless, at
some ages, such as 65, there may be as much as a 6 percent
increase in the old age work force under privatized accounts.
JEL Classification: J26, H55, D91, J14, J16, J32
______________________________
"The Role of Information and Social Interactions in Retirement
Plan Decisions: Evidence from a Randomized Experiment"
BY: ESTHER DUFLO
Massachusetts Institute of Technology (MIT)
Department of Economics
Centre for Economic Policy Research (CEPR)
National Bureau of Economic Research (NBER)
EMMANUEL SAEZ
Harvard University
Department of Economics
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=307122
Paper ID: NBER Working Paper No. W8885
Date: April 2002
Contact: ESTHER DUFLO
Email: Mailto:Eduflo@mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Department of Economics
E52-252g
50 Memorial Drive
Cambridge, MA 02142 UNITED STATES
Co-Auth: EMMANUEL SAEZ
Email: Mailto:saez@fas.harvard.edu
Postal: Harvard University
Department of Economics
M-4
Littauer Center
Cambridge, MA 02138 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
This paper analyzes a randomized experiment to shed light on the
role of information and social interactions in employees'
decisions to enroll in a Tax Deferred Account (TDA) retirement
plan within a large university. The experiment encouraged a
random sample of employees in a subset of departments to attend
a benefits information fair organized by the university, by
promising a monetary reward for attendance. The experiment more
than tripled the attendance rate of these treated individuals
(relative to controls), and doubled that of untreated
individuals within departments where some individuals were
treated. TDA enrollment 5 and 11 months after the fair was
significantly higher in departments where some individuals were
treated than in departments where nobody was treated. However,
the effect on TDA enrollment is almost as large for individuals
in treated departments who did not receive the encouragement as
for those who did. We provide three interpretations,
differential treatment effects, social network effects, and
motivational reward effects, to account for these results.
JEL Classification: D83, I22
______________________________
"The Measure of Man and Older Age Mortality: Evidence from the
Gould Sample"
BY: DORA L. COSTA
Massachusetts Institute of Technology
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=305067
Paper ID: NBER Working Paper No. W8843
Date: March 2002
Contact: DORA L. COSTA
Email: Mailto:costa@mit.edu
Postal: Massachusetts Institute of Technology
E52-274C
50 Memorial Drive
Cambridge, MA 02142 UNITED STATES
Phone: 617-253-2989
Fax: 617-253-1330
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
This paper documents differences in body size between white,
black, and Indian mid-nineteenth century American men and
investigates the socioeconomic and demographic determinants of
frame size using a unique data set of Civil War soldiers. It
finds that over time men have grown taller and heavier and have
relatively less abdominal fat. Abdominal fat in young adulthood
was an excellent predictor of older age mortality from ischemic
heart disease or stroke. Changes in frame size explain roughly
three-fifths of the mortality decline among white men between
1915 and 1988 and predict even sharper declines in older age
mortality between 1988 and 2022.
JEL Classification: J11, I12, N31
______________________________
"The Intergenerational State: Education and Pensions"
BY: MICHELE BOLDRIN
University of Minnesota
Department of Economics
Centre for Economic Policy Research (CEPR)
Universidad Carlos III de Madrid
Department of Economics
ANA MONTES
Universidad de Murcia
Departamento de Fundamentos del Analisis Economico
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=308041
Paper ID: CEPR Discussion Paper No. 3275
Date: March 2002
Contact: MICHELE BOLDRIN
Email: Mailto:mboldrin@econ.umn.edu
Postal: University of Minnesota
Department of Economics
271 19th Avenue South
Minneapolis, MN 55455 UNITED STATES
Phone: 612-624-4551
Fax: 612-624-0209
Co-Auth: ANA MONTES
Email: Mailto:anmontes@fcu.um.es
Postal: Universidad de Murcia
Departamento de Fundamentos del Analisis
Economico
Campus de Espinardo
30100 Murcia, SPAIN
Paper Requests:
Contact CEPR Discussion papers, 90-98 Goswell Road, London EC1V
7RR, UK. Phone:(44 20)7878 2900. Fax:(44 20) 7878 2999.
Mailto:orders@cepr.org Fee: 5 (British Pound Sterling) /US $5 /8
euros per paper. Payment in advance is requested. Postage and
packing additional.
ABSTRACT:
When credit markets to finance investment in the human capital
of young people are missing, the competitive equilibrium
allocation is inefficient. When generations overlap, this
failure can be mitigated by properly designed social
institutions such as public education and public pensions. We
show that, when established jointly, they implement an
intergenerational transfer scheme supporting the complete market
allocation. Through the public financing of education, the young
borrow, from the middle age to invest in human capital. When
employed, they pay back their debt via a social security tax,
the proceedings of which finance pension payments to the now
elderly lenders. We consider other, allocationally equivalent,
financing schemes. In all cases, when the complete market
allocation is achieved a certain equality should be observed
among implicit rates of return and the market rate of return. We
test this prediction by using micro and macro data from Spain.
The results are, surprisingly, good. We also use the model to
quantify the impact of undergoing demographic change on the
implicit rates of return. The results point, unsurprisingly, to
dramatic changes in generational rates of return. Contrary to
what predicted by earlier studies in the generational accounting
tradition, our findings suggest that future generations are not
necessarily going to be worse than current ones.
Keywords: Public education, public pensions, efficient
intergenerational arrangements
JEL Classification: H11, H30, H42, I20, O11
______________________________
"Shrinking Labor Forces and Early Retirement"
BY: TRYGGVI THOR HERBERTSSON
University of Iceland
Institute of Economic Studies
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=292562
Paper ID: University of Iceland IoES Working Paper No. W01:10
Date: November 29, 2001
Contact: TRYGGVI THOR HERBERTSSON
Email: Mailto:tthh@hi.is
Postal: University of Iceland
Institute of Economic Studies
Aragata 14
IS-101 Reykjavik, ICELAND
Phone: +354 525 4535
Fax: +354 525 4096
ABSTRACT:
The withdrawal of older workers from the labor force creates a
variety of economic challenges, including an increase in unused
production capacity. Costs due to early retirement measured in
terms of forgone output averaged 6.3 percent of potential gross
domestic product in the OECD in 1998. These costs, which vary
greatly from country to country, are highest in Hungary (15.9
percent of potential output) and lowest in Iceland (0.5
percent). These differences are important for policy makers to
the extent that their causes are rooted in economic policy and
structure rather than in cultural and environmental factors. In
light of these costs, this paper attempts to summarize and
discuss alternative theories on why people retire early and how
early retirement programs came about, in order to understand
better the roots of the problem.
Keywords: Participation rates, early retirement, foregone
output
JEL Classification: H55, J14, J21, J26
______________________________
"Longevity and Life Cycle Savings"
BY: DAVID E. BLOOM
Harvard University
School of Public Health
National Bureau of Economic Research (NBER)
DAVE CANNING
Queen's University of Belfast
BRYAN S. GRAHAM
Harvard University
Department of Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=302569
Paper ID: NBER Working Paper No. W8808
Date: March 2002
Contact: DAVID E. BLOOM
Email: Mailto:dbloom@hsph.harvard.edu
Postal: Harvard University
School of Public Health
677 Huntington Avenue
Boston, MA 02115 UNITED STATES
Phone: 617-432-0654
Co-Auth: DAVE CANNING
Email: Mailto:d.canning@qub.ac.uk
Postal: Queen's University of Belfast
Department of Economics
Belfast BT7 1NN, UNITED KINGDOM
Co-Auth: BRYAN S. GRAHAM
Email: Mailto:bgraham@fas.harvard.edu
Postal: Harvard University
Department of Economics
Littauer Center
Cambridge, MA 02138 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
We add health and longevity to a standard model of life cycle
saving and show that, under plausible assumptions, increases in
longevity lead to higher savings rates at every age, even when
retirement is endogenous. In a stable population these higher
savings rates are offset by increased old age dependency, but
during the disequilibrium phase, when longevity is rising, the
effect on aggregate savings rates can be substantial. Our
results explain the boom in savings in East Asia during 1950-90
as a combination of rising life expectancy and falling youth
dependency, though they predict that savings in the region will
return to more normal levels as populations age. We also find
that falling life expectancies in Africa are associated with
declining savings rates.