_________________________________________________________________
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. 4, No. 5: March 14, 2003
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Publisher: LSN Employment, Labor, Compensation & Pension Journals
a division of
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Editor: PAMELA PERUN
Urban Institute
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Copyright: SSEP, Inc. 2003. All rights reserved.
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Topic of This Issue:
International Perspectives
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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
"Tax-preferred Savings Accounts and Marginal Tax Rates: Evidence
on RRSP Participation"
Canadian Journal of Economics, Vol. 35, pp. 436-456, 2002
KEVIN MILLIGAN
Universität Wien
Department of Economics
National Bureau of Economic Research (NBER)
"The Global Retirement Crisis"
Geneva Papers, Vol. 27, pp. 486-511, 2002
RICHARD JACKSON
Center for Strategic and International Studies
"Incentives to Contributing to Supplementary Pension Funds: Going
Beyond Tax Incentives"
Geneva Papers, Vol. 27, pp. 555-570, 2002
CLARA BUSANA BANTERLE
Pennsylvania State University Abington
"Pension Funds in France: Still a Dead End?"
Geneva Papers, Vol. 28, pp. 127-150, 2003
ANNE LAVIGNE
Universite d'Orleans
WORKING PAPERS
"The Role of the Senior HR Executive in Japan and the United
States: Companies, Countries, and Convergence"
SANFORD M. JACOBY
University of California, Los Angeles
Anderson School of Management
KAZURO SAGUCHI
University of Tokyo
Faculty of Economics
"Ageing and the Tax Implied in Public Pension Schemes:
Simulations for Selected OECD Countries"
ROBERT FENGE
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
MARTIN WERDING
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
"Public Saving and Policy Coordination in Ageing Economies"
MARTIN FLODEN
Stockholm School of Economics
Department of Economics
Centre for Economic Policy Research (CEPR)
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Tax-preferred Savings Accounts and Marginal Tax Rates: Evidence
on RRSP Participation"
Canadian Journal of Economics, Vol. 35, pp. 436-456, 2002
BY: KEVIN MILLIGAN
Universität Wien
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=318613
Contact: KEVIN MILLIGAN
Email: Mailto:kevinmil@interchange.ubc.ca
Postal: Universität Wien
Department of Economics
997-1873 East Mall
Vancouver, BC V6T 1Z1 CANADA
ABSTRACT:
The effect of taxes on participation in Registered Retirement
Savings Plans between 1982 and 1996 is studied. Interprovincial
changes in the tax structure over this period provide
identifying variation. Using this variation, I find that taxes
influence households' participation decisions, but more weakly
than previously estimated. A 10 percentage point increase in the
marginal tax rate is estimated to increase the probability of
participation by 8 per cent. This explains only 5.1 per cent of
the trend in participation. I also find suggestive evidence that
the carryforward mechanism may be used as an instrument for tax
base smoothing.
JEL Classification: H24
______________________________
"The Global Retirement Crisis"
Geneva Papers, Vol. 27, pp. 486-511, 2002
BY: RICHARD JACKSON
Center for Strategic and International Studies
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=342567
Contact: RICHARD JACKSON
Email: Mailto:author339258@ssrn.com
Postal: Center for Strategic and International Studies
Washington, DC 20006 UNITED STATES
ABSTRACT:
Over the next few decades, the rapid aging of populations in
Europe, Japan, and North America threatens the stability of the
world's major economies. A determined push for reform can still
avert fiscal and economic crisis. But the time for corrective
action is running out. And the problem is worse than is
generally assumed.
These are the conclusions of "The Global Retirement Crisis:
The Threat to World Stability and What to Do About It", a new
report jointly sponsored by Citigroup's Global Investment
Management and Private Banking Group and the Center for
Strategic and International Studies (CSIS), a Washington-based
think tank. The report finds that overly optimistic projections
by the European Commission and the Organization for Economic
Cooperation and Development may greatly underestimate future
growth in government retirement spending. It stresses the
importance of boosting productivity, extending work lives, and
developing funded alternatives to pay-as-you-go pension systems.
Along the way, it takes the reader on a "world tour" that
describes what individual countries have already accomplished,
and what remains to be done.
______________________________
"Incentives to Contributing to Supplementary Pension Funds: Going
Beyond Tax Incentives"
Geneva Papers, Vol. 27, pp. 555-570, 2002
BY: CLARA BUSANA BANTERLE
Pennsylvania State University Abington
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=342571
Contact: CLARA BUSANA BANTERLE
Email: Mailto:clara.busana@econ.univ.trieste.it
Postal: Pennsylvania State University Abington
Piazzale Europa 1
34127 Trieste, ITALY
ABSTRACT:
This paper focuses on whether it is appropriate in Italy to
introduce increased tax benefits to the rate of return of
contributions made into supplementary pension funds.
We will review the role of private pensions in the pension
system known as the "three-pillar system" and the pension system
known as notional defined contribution (NDC) system. Afterwards
we will outline the reasons for, and presumed effectiveness of,
tax incentives, based on various theories including the
traditional life cycle hypothesis, the altruistic or
precautionary saving theory and the behavioural approach.
These three theories are compared using the results of
numerous empirical studies. In conclusion we will stress that,
especially in public NDC systems (as in Italy), the private
pillar develop on the lines of the dominating theory, deemed
optimal. However, tax incentives alone cannot make up for the
lack of optimality. Referring to the behavioural approach, we
will highlight the potential effectiveness of widespread
dissemination of information on the characteristics of private
pension accumulation instruments and the public manager's
crucial role as supporter and guarantor in this respect.
______________________________
"Pension Funds in France: Still a Dead End?"
Geneva Papers, Vol. 28, pp. 127-150, 2003
BY: ANNE LAVIGNE
Universite d'Orleans
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=377081
Contact: ANNE LAVIGNE
Email: Mailto:lavigne_anne@univ-orleans.fr
Postal: Universite d'Orleans
Rue de Blois
B.P. 6739
45067 Orleans Cedex 2, FRANCE
ABSTRACT:
The French Presidential elections of 2002 have exacerbated the
debate on the future of the pension system. This debate started
about 20 years ago, and has been marked by numerous reports,
books, and contributions that have not been followed by any
significant political decisions. Only one reform, the Balladur
reform (named after the Conservative Prime Minister in place at
that time, Edouard Balladur) was enacted in 1993. Surprisingly,
the Balladur reform was inspired by the White Book issued in
1991 and ordered by Michel Rocard when he was the Prime Minister
of a Socialist government. The first pillar of the pension
system, i.e. the pay-as-you-go (PAYG) basic scheme, was the only
concern of the Balladur reform. The other pillars, i.e.
complementary PAYG or funded schemes, were not affected. In
March 1997, Parliament enacted the Thomas Act (named after the
Conservative deputy who wrote the proposal) that introduced
retirement savings plan (Plans d'epargne retraite), but the law
was never enforced because of the political change in June 1997
and was formally abrogated in 2002.
Today there is still no consensus on pension funds in France.
The only issue that seems not to be debatable is the willingness
to maintain a PAYG public scheme for basic and complementary
pension schemes. The debate concerns the introduction of pension
funds as a third pillar. This paper shows that, even if pension
funds hardly exist in France, they have close, but imperfect,
substitutes such as life insurance and employee-saving schemes.
The difficulty is that these saving instruments are not
specifically designed for retirement purposes. There is thus a
risk of insufficient savings for old age. We advocate the
introduction of pension-oriented schemes, but not as designed by
the Thomas Act, since this offers insufficient protection
against financial risks for wage-earners. The first section of
this paper is devoted to an institutional overview of the French
pension system and presents some basic statistics. The second
section gives some details on supplementary occupational–funded
schemes. In section 3, we argue that funding does exist in
France, through personal savings. In section 4 we show that the
last reforms did not pave the way to pension funds. Section 5
concludes.
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"The Role of the Senior HR Executive in Japan and the United
States: Companies, Countries, and Convergence"
BY: SANFORD M. JACOBY
University of California, Los Angeles
Anderson School of Management
KAZURO SAGUCHI
University of Tokyo
Faculty of Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=357040
Date: December 2002
Contact: SANFORD M. JACOBY
Email: Mailto:sjacoby@anderson.ucla.edu
Postal: University of California, Los Angeles
Anderson School of Management
110 Westwood Plaza
Los Angeles, CA 90095-1481 UNITED STATES
Phone: 310-825-2505
Fax: 310-825-0218
Co-Auth: KAZURO SAGUCHI
Email: Mailto:saguchi@e.u-tokyo.ac.jp
Postal: University of Tokyo
Faculty of Economics
7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033, JAPAN
ABSTRACT:
Based on data from an original survey of senior HR executives in
Japan and the United States, this paper provides empirical data
for evaluating institutional convergence. In both countries, the
headquarters HR function has shrunk and employment decisions
have become more decentralized. However, because the pace of
change has been more rapid in the U.S., the national gap has
widened. Differences persist in other areas, such as the HR
executive's role in strategic decisions, perceived power of the
HR function, how executives balance shareholder and employee
interests, and the consequences of these decisions for corporate
governance and organizational outcomes.
Keywords: Corporate governance, convergence, human resource
management, employment, employees
JEL Classification: J3, M5, P5
______________________________
"Ageing and the Tax Implied in Public Pension Schemes:
Simulations for Selected OECD Countries"
BY: ROBERT FENGE
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
MARTIN WERDING
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=380344
Other Electronic Document Delivery:
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Paper ID: CESifo Working Paper Series No. 841
Date: January 2003
Contact: MARTIN WERDING
Email: Mailto:werding@ifo.de
Postal: CESifo (Center for Economic Studies and Ifo Institute for
Economic Research)
Poschinger Str. 5
DE-81679 Munich, GERMANY
Co-Auth: ROBERT FENGE
Email: Mailto:fenge@ifo.de
Postal: CESifo (Center for Economic Studies and Ifo Institute for
Economic Research)
Poschinger Str. 5
DE-81679 Munich, GERMANY
Paper Requests:
Hardcopies For Libraries: contact Gertraud Porak, Postal: CESifo
Inc., Poschinger Str. 5, 81679 Munich, Germany.
Mailto:porak@CESifo.de
ABSTRACT:
A key figure which can be applied to measuring
inter-generational imbalances involved in existing public
pension schemes is given by the "implicit tax" that is levied on
each generation's life-time income through participation in
these systems. The implicit tax arises from the fact that, quite
generally, pension benefits received fall short of actuarial
returns to contributions (i.e., "explicit" social security
taxes) paid while actively working. If, in spite of large-scale
demographic ageing, public pension schemes are continued to be
run based on current rules, implicit tax rates will sharply
increase for generations who are currently young when compared
to those who are already approaching retirement. In the paper,
this will be illustrated for the cases of France, Germany,
Italy, Japan, Sweden, the UK, and the US. The results are based
on simulations covering representative individuals in all age
cohorts born from 1940 to 2000. At the same time, there are
striking differences across countries regarding both the level
of implicit taxes and their time paths over successive age
cohorts, which can be attributed to different ageing processes
as well as to different institutional features of national
pension systems. In addition, we are studying the impact of
pension reforms that were recently enacted or are currently
under way, thus demonstrating how effective the measures taken
are in terms of smoothing the inter-generational profile of
implicit tax rates.
Keywords: Demographic Ageing, Public Pensions, Pension Reform,
Inter-generational Redistribution, International Comparisons
JEL Classification: H55, J11, D63
______________________________
"Public Saving and Policy Coordination in Ageing Economies"
BY: MARTIN FLODEN
Stockholm School of Economics
Department of Economics
Centre for Economic Policy Research (CEPR)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=346661
Paper ID: CEPR Discussion Paper No. 3567
Date: October 2002
Contact: MARTIN FLODEN
Email: Mailto:martin.floden@hhs.se
Postal: Stockholm School of Economics
Department of Economics
P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm, SWEDEN
Phone: +46 8 736 9263
Fax: +46 8 313 207
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:
In the coming decades, the share of people in working age will
fall significantly in most developed countries. According to
optimal taxation theory, public debts should be reduced before
the baby-boom generation retires. I find that if debts are
instead maintained at the current levels, welfare may be reduced
substantially in countries with a large public sector and/or a
large demographic change. Furthermore, since the population
ageing will be less dramatic in the United States than in
Europe, capital will move from Europe to the United States.
These capital movements will facilitate the US demographic
transition but aggravate the transition in most European
countries.