Retirement Rules Research Articles

Um estudo sobre os diferenciais de remuneração entre os professores das redes pública e privada de ensino

O artigo investiga os diferenciais de remuneração entre os professores dos diversos níveis de ensino, das redes pública e privada. Analisando somente os salários, os diferenciais são na maior parte dos casos favoráveis ao setor privado. Esta conclusão se altera quando se calcula o Valor Presente do Contrato de Trabalho. O VPCT leva em consideração toda a renda auferida pelo docente, incluindo os salários recebidos durante a vida ativa e também a aposentadoria. O VPCT do ensino público é sempre mais elevado que o VPCT privado. Também são calculadas as Taxas Internas de Retorno (TIRs) da previdência social, cujos resultados mostram que os retornos do setor público são maiores que os do setor privado. Conclui-se que as diferentes regras de aposentadoria têm importância significativa nos rendimentos ao longo da vida dos docentes. Também se conclui que docentes da rede pública não recebem remuneração inferior a seus pares do setor privado.

Early Retirement, Labor Supply, and Benefit Withholding: The Role of the Social Security Earnings Test

The labor supply and benefit claiming incentives provided by the early retirement rules of the Social Security Old Age benefits program are of growing importance as the Normal Retirement Age (NRA) increases to 67, the labor force participation of Older Americans rises, and a variety of reforms to the Social Security system are considered. Any reform needs to take into account the effects and rationale of the Social Security Earnings Test and the Actuarial Adjustment Factor. We describe these incentives, and analyze benefit withholding patterns using data from the Master Beneficiary Files of the Social Security Administration, and present descriptive and exploratory evidence on the determinants of benefit withholding using data from the Health and Retirement Survey. We then investigate the importance of the Earnings Test limits for work and claiming behavior using a dynamic life-cycle model of labor supply, benefit claiming, and withholding. We use the latter framework to compare the consequences of a number of changes to the Earnings Test provision for the labor supply behavior and earnings of older Americans.

Early claiming of social security benefits and labour supply behaviour of older Americans

The labour supply incentives provided by the early retirement rules of the United States Social Security Old Age benefits program are of growing importance as the Normal Retirement Age (NRA) increases to 67 and the labour force participation of older Americans starts to increase. These incentives allow individuals who claim benefits before the NRA but continue to work, or return to the labour force, to increase their future rate of benefit pay by having benefits withheld. Since the adjustment of the benefit rate takes place only after the NRA is reached, benefits received before the NRA can become actuarially unfair for those who continue to work after claiming. Consistent with these incentives, estimates from bivariate models of the monthly labour force exit and claiming hazards using data from the Health and Retirement Study indicate that early claimers who do not withdraw from the labour force around the time they claim are increasingly likely to stay in the labour force.

The social security earnings test and work incentives

AbstractThe labor supply and benefit claiming incentives provided by the early retirement rules of the Social Security Old Age benefits program are of growing importance as the Normal Retirement Age (NRA) increases to 67, the labor force participation of Older Americans rises, and a variety of reforms to the Social Security system are considered. Any reform needs to take into account the effects and rationale of the Social Security Earnings Test and the Actuarial Adjustment Factor, which are likely to be widely misunderstood due to the relatively little attention paid by policymakers and researchers to the fact that Americans are willing to work while receiving benefits. We describe these incentives and emphasize that individuals who claim benefits before the NRA but continue to work, or return to the labor force, can reduce the early retirement penalty by suspending the collection of monthly benefits if they earn above the Earnings Test limit. We then argue that the Earnings Test can be distortionary and is costly to administer, and that these characteristics are inflated by the lack of information given to Older Americans regarding the consequences of working while receiving retirement benefits. We present results from statistical models of labor force exit behavior using data from the Health and Retirement Study showing the relevance of these incentives, and investigate the importance of informational asymmetries among beneficiaries regarding benefit withholding using a dynamic life‐cycle model of labor supply and benefit claiming. We then use the latter framework to compare the behavioral and welfare implications of a removal of the Earnings Test to the policy of providing more information regarding the Earnings Test and the adjustment of the rate of benefit pay to Older Americans. © 2007 by the Association for Public Policy Analysis and Management

Coping with Spain's Aging: Retirement Rules and Incentives

This paper evaluates the macroeconomic and welfare effects of extending the averaging period used to calculate pension benefits in a pay-as-you-go system. It also examines the complementarities between reforms extending the averaging period and those increasing the retirement age under alternative tax policies. The analysis is based on a model in the Auerbach-Kotlikoff tradition applied to the Spanish economy. Without reforms, the simulations suggest that aging-related spending as a share of output will increase 16 percentage points by 2050, which are twice as much as in European Commission (2006) projections due to general equilibrium effects. Also, reforms extending the averaging period to the entire work life limit expenditure pressures at the peak of the demographic shock as much as increasing the retirement age in line with life expectancy (4 percentage points of GDP). These reforms and prefunding the demographic shock mitigate the adverse macroeconomic effects of aging and improve welfare.

Coping with Spain's Aging: Retirement Rules and Incentives

This paper evaluates the macroeconomic and welfare effects of extending the averaging period used to calculate pension benefits in a pay-as-you-go system. It also examines the complementarities between reforms extending the averaging period and those increasing the retirement age under alternative tax policies. The analysis is based on a model in the Auerbach-Kotlikoff tradition applied to the Spanish economy. Without reforms, the simulations suggest that aging-related spending as a share of output will increase 16 percentage points by 2050, which are twice as much as in European Commission (2006) projections due to general equilibrium effects. Also, reforms extending the averaging period to the entire work life limit expenditure pressures at the peak of the demographic shock as much as increasing the retirement age in line with life expectancy (4 percentage points of GDP). These reforms and prefunding the demographic shock mitigate the adverse macroeconomic effects of aging and improve welfare.

Pension reforms and gender: The case of Sweden

This article analyzes the effects of pension reform for men and women by comparing the outcomes in the system after reform to the outcomes under the prior system. The authors also study the incentive effects on labor supply. The size of the labor force, however, is also influenced by the rules for retirement, social insurance programs (e.g., sickness insurance and unemployment insurance), collective bargaining agreements, and seniority rules. Using a simulation model, the authors compare women's pension benefits and contributions to those of men in the new Swedish system and in the old. The analysis includes simulating the wage and employment histories of representative men and women and the pension benefits these are likely to generate under the old and new rules. After showing the results of this model, the authors describe and discuss the supplementary pension systems, that is, the negotiated collective agreement schemes and different pathways to retirement. Based on empirical evidence from Swedish and Latin America simulated data, the final section of the article discusses gender impact of pension rules and how to design pension, systems to ensure adequate pension benefits for both women and men.

LABORsim: An Agent-Based Microsimulation of Labour Supply – An Application to Italy

Most Oecd Countries are experiencing a rapid population ageing. Italy adds to this picture a very low labour market participation of the elders, so that most projections of the impact of ageing on the labour market are rather pessimistic. However, there are other long run modifications currently underway that will presumably have a sizeable impact on the labour market, above all changes in the retirement legislation, in educational choices and participation behaviour. In this paper we present LABORsim, an agent based microsimulation model of labour supply, which offers new insights on the likely evolution of the labour force in the next decades in Italy. LABORsim integrates the current demographic projections with simulation modules modelling retirement rules, retirement behaviours, migrations, education and participation choices, plus a consolle to implement various policy scenario analyses. When all these factors are taken into account, projections for next decades are not that pessimistic. In most scenarios, the overall participation rate is expected to increase steadily for the next two decades, while shortages in the labour force supply and an unfavourable dynamics for the economic dependency rate are expected to show up only after 2020, when the baby boom generations will arrive at their retirement ages. This is not enough, however, to allow Italy to meet the EU Stocknolm and Lisbon targets for male and female employment rates for many decades to come. The sharp increase in the participation rates for the elderly (aged 55–64), mainly driven by the recent changes in the retirement eligibility criteria, will make it possible to meet the Stockholm target of 50% employment rate in this age group by 2015, i.e. with only 5 years of delay.

Designing Benefit Rules for Flexible Retirement with or Without Redistribution

The traditional approach to flexible retirement (e.g. NDC) neglects the impact of asymmetric information on actuarial fairness (neutrality). The mechanism design approach (e.g. Diamond, 2003) gives up the requirement of neutrality and looks for a redistributive second-best benefit-retirement-age schedule. Trying to combine the two approaches, the present paper determines the neutral (redistribution-free) second-best solution. This neutral solution is, however, often Pareto-dominated by the redistributive one.

Designing optimal linear rules for flexible retirement

This paper applies the method of mechanism design to find optimal linear pension rules (contribution rate and monthly benefit function) for flexible retirement: First the government announces a rule, making the benefit dependent on employment length. Each individual, having private information on his own expected lifespan and utility function, optimizes his employment length, conditional on that rule. The government chooses the optimal Bayesian linear rule, which maximizes the social welfare (e.g. the aggregate individual maxima) under a social constraint (e.g. the aggregate net lifetime contribution equals zero). Under this rule there is a better compromise between incentives and insurance than under so-called actuarially fair benefits.

STATUS QUO PROBLEM IN SOCIAL SECURITY REFORMS

Several papers show that a privatization of the social security system will not be politically supported by the current generations. The asymmetry in the timing of welfare gains and losses is what generates a status quo bias in favor of the unfunded system. We explore a simple mechanism to offset the status quo problem using a general-equilibrium overlapping generations model with endogenous labor supply calibrated to the Spanish economy. The mechanism implies a privatization of the social security system together with the elimination of compulsory retirement rules. Along the transition path, this mechanism drastically shortens (from three decades to only one decade) the convergence to the new steady state, diminishing the asymmetry in the timing of welfare gains and losses. As a result, there is an increase beyond 50% in the fraction of individuals that are better off with the implementation of such a reform.This work has benefited from useful comments by Jonathan Heathcote, Antonio Manresa, and seminar participants at CREB, Carlos III de Madrid, ESF Network in Social Insurance, and Stockholm School of Economics. We acknowledge financial support from Ministerio de Ciencia y Tecnología (SEC2000-0796) and Generalitat de Catalunya (SGR00-016).

Designing Optimal Benefit Rules for Flexible Retirement

This paper applies mechanism design to find an optimal nonlinear pension benefit rule for flexible retirement. The economic problem can be formulated as a nonlinear dynamic optimization with an isoperimetric constraint. Our major result is as follows: If the social welfare function is strictly concave, then the incentives to postpone retirement should be dampened.

Designing Optimal Linear Rules for Retirement

This paper applies the method of mechanism design to find optimal linear pension line rules (contribution rate and monthly benefit function) for flexible retirement: First the government announces a rule, making the benefit dependent on employment length. Individuals with different lifespans and utility functions optimize their employment lengths conditional on that rule. The government (knowing only the statistical distribution of the individual characteristics, but not the individual values) chooses an optimal linear rule, which maximizes the social welfare (e.g. the aggregated individual maxima) under a social constraint (e.g. the aggregated net lifetime contribution equals zero).

Profile: The Heir Apparent

If the consensus of the 15th Party Congress of 1997 is upheld, in October 2002 Jiang Zemin will retire from his position at the helm of the Party and from some of his government positions. The heir apparent, Hu Jintao, will then be in place to initiate another era in Chinese politics. The consensus on the forthcoming succession in Party leadership that was first spelled out back in 1997 stipulated that, in principle, all four of the present members of the Standing Committee of the Politburo who are above the age of 70 (Jiang Zemin, Li Peng, Zhu Rongji and Wei Jianxing) should step down from the Standing Committee this year. Among the three members who are to remain, Hu Jintao, who is now 59, was informally designated the likely successor as Party secretary. The other two who are expected to retain their seats on the Standing Committee, Li Ruihuan and Li Lanqing, are today 68 and 70, and if the Party continues to abide by the over-70 retirement rule, their reappointments in October will be for their last term.'

Quasi-hyperbolic discounting and retirement

Some people have self-control problems regularly. This paper adds endogenous retirement to Laibson’s quasi-hyperbolic discounting savings model [Quarterly Journal of Economics 112 (1997) 443–477]. Earlier selves think that the deciding self tends to retire too early and may save less to induce later retirement. Still earlier selves may think the pre-retirement self does this too much, saving more to induce early retirement. The consumption pattern may be different from that with exponential discounting. Other observational non-equivalence includes the impact of changing mandatory retirement rules or work incentives on savings and a possibly negative marginal propensity to consume out of increased future earnings. Naive agents are briefly considered.

A Profile of the Active Public Civil Servantas at the Federal, State and Municipal Levels - A Comparison of Available Data Bases: Rais, PNAD and Siape

The main purpose of this paper is a description of the active civil servants, drawing their profile at the federal, state and municipal levels with respect to sex, age and occupation. These workers in the public sector are ruled by special laws not applicable to the other workers of the private sector. Furthermore, a comparative analysis of the three available data sources is developed. The first one are sample data and the other two, administrative data: Pesquisa Nacional por Amostra de Domicilios (PNAD) from IBGE, for the federal, state and municipal levels; Relacao Anual de Informacoes Sociais (Rais) from Ministerio do Trabalho e Emprego (MTE), for the federal, state and municipal levels; Sistema Integrado de Administracao de Pessoal (Siape) from Ministerio do Planejamento, Orcamento e Gestao (MPOG), for the federal level. The years considered were 1997, 1998 (for Rais, PNAD and Siape) and 1999 (for PNAD and Siape). After doing a comparative analysis of these different data we decided to work with data from Siape at the federal level and data from PNAD at state and municipal level. A profile of the servants at the federal, state and municipal level as well as their mean income is presented. In order to draw a profile of the servants, the classes used are teachers, non teachers without graduate level and non-teachers with graduate level. We classified as non teachers all those servants which occupy positions different from teachers, although it can happen that a server is classified as a teacher although holding a different position and vice-versa. The non teachers with graduate level have instruction level equal or higher than graduation. These classes were selected because they have different characteristics towards retirement rules, income evolution, mortality, admission politics etc. We have also considered different age groups and the two sexes.

Retirement and Social Security in a Probabilistic Voting Model

Why are social security transfers associated with retirement rules? This paper focuses on the political interactions between retirement and social security. Using a probabilistic voting approach, it analyzes why old people are induced to retire in order to receive pension transfers from the young. A crucial hypothesis is that leisure in old age represents a “merit good,” which is positively valued by all agents in the society, young and old. Thus, the politicians choose to tax the labor income of the old, to induce them to retire. Retirement increases the level of ideological homogeneity of the old. In fact, once retired, the elderly are more “single-minded,” since they only care about redistributive issues, such as pensions. This increase in their political power allows them to win the political game and to receive a positive transfer from the young (social security).

Entrada e saída precoce da força de trabalho: incentivos do regime de previdência brasileiro

Este artigo explora os efeitos de uma regra do sistema previdenciário brasileiro, a da aposentadoria por tempo de trabalho, sobre as escolhas individuais de entrada e de retirada da força de trabalho Os resultados são comparados com os que seriam obtidos em um regime de aposentadoria por idade e em um regime de capitalização em que o indivíduo faz sua própria poupança. Nosso principal resultado é que o regime brasileiro, quando comparado aos demais, incentiva tanto a entrada quanto a saída precoce da força de trabalho, um grande desperdício de recursos para a sociedade.

Probation, layoffs, and wage-tenure profiles: A sorting explanation

In this paper, we demonstrate that sorting considerations alone generate steep wage-tenure profiles, high turnover rates of newly hired workers, an increase in the variance of wages with seniority, and mandatory retirement rules. We show that `excessive monitoring' is sometimes necessary to deter applications from low productivity workers. We derive conditions under which firms randomly test workers, as well as conditions under which firms retain some workers that fail its test. Finally, we show that competition for workers can lower total output.

The Economics of Pensions and Variable Retirement Schemes.

PART ONE: SOCIAL SECURITY REFORM: A SURVEY: Social Security Policy in International Perspective Public Pensions: Economic Approaches PART TWO: INDIVIDUAL RETIREMENT DECISIONS: Determinants of the Lifetime Labour Supply A Basic Analytical Framework Marginal Fairness and Pareto-Efficiency PART THREE: HETEROGENEOUS POPULATIONS AND EFFICIENT RETIREMENT RULES: Variable Retirement Schemes and Individual Choices The Common Contribution Rate Adverse Selection and Benefit Rules Summary and Conclusions.