Announcements

THE SOCIAL INSURANCE RESEARCH NETWORK (SIRN), sponsored by the National Academy of Social Insurance (NASI) The Social Insurance Research Network (SIRN), directed by Larry Atkins, President, National Academy of Social Insurance, is an online venue providing access to scholarly research and professional announcements in the Social Insurance community. Social Insurance includes the systems for insuring workers and their families against economic insecurity caused by the loss of income from work and the cost of health care, such as Social Security, Medicare, Workers' Compensation, unemployment insurance, related social assistance and private employee benefits. NASI is a nonprofit, nonpartisan organization made up of the nation's leading experts on social insurance. Its mission is to promote understanding and informed policymaking on social insurance and related programs through research, public education, training, and the open exchange of ideas. SIRN is dedicated to increasing communication among social insurance scholars, practitioners, and policy makers throughout the world.


Table of Contents

Earnings Adjustment Frictions: Evidence from the Social Security Earnings Test

Alexander Gelber, National Bureau of Economic Research (NBER)
Damon Jones, University of Chicago
Daniel W. Sacks, Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Age of Decision: Pension Savings Withdrawal and Consumption and Debt Response

Sumit Agarwal, National University of Singapore
Jessica Pan, National University of Singapore (NUS)
Wenlan Qian, National University of Singapore - NUS Business School

The Impact of Pension Systems on Financial Development: An Empirical Study

Shouji Sun, University of International Business and Economics
Jiye Hu, Center for Law and Economics, China University of Political Science and Law

Realising the Right to Social Security -- A Desirable and Feasible Floor for All

Richa Kashyap, KIIT University
Vivek Saurav, Kalinga Institute of Industrial Technology (KIIT University) - KIIT University


SOCIAL SECURITY, PENSIONS & RETIREMENT INCOME eJOURNAL

"Earnings Adjustment Frictions: Evidence from the Social Security Earnings Test" Free Download

ALEXANDER GELBER, National Bureau of Economic Research (NBER)
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DAMON JONES, University of Chicago
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DANIEL W. SACKS, Indiana University - Kelley School of Business - Department of Business Economics & Public Policy
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We study frictions in adjusting earnings in response to changes in the Social Security Annual Earnings Test (AET), using a panel of Social Security Administration microdata on one percent of the U.S. population from 1961 to 2006. Individuals continue to "bunch" at the convex kink the AET creates even when they are no longer subject to the AET, demonstrating that adjustment frictions help drive behavior in a new and important context. We develop a novel framework for estimating an earnings elasticity and an adjustment cost using information on the amount of bunching at kinks before and after policy changes in earnings incentives around the kinks. We apply this method in settings in which individuals face changes in the AET benefit reduction rate, and we estimate in a baseline case that the earnings elasticity with respect to the implicit net-of-tax share is 0.23, and the fixed cost of adjustment is $152.08. Our results demonstrate that the short-run impact of changes in the effective marginal tax rate can be substantially attenuated.

"Age of Decision: Pension Savings Withdrawal and Consumption and Debt Response" Free Download

SUMIT AGARWAL, National University of Singapore
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JESSICA PAN, National University of Singapore (NUS)
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WENLAN QIAN, National University of Singapore - NUS Business School
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This paper uses a unique panel of consumer financial transactions to examine how aging consumers respond to the option to cash out retirement savings. To obtain causal identification, we exploit an administrative regulation in Singapore that allows individuals to cash out a fraction of their pension savings at age 55. We find a large and highly significant increase in bank account balances when an individual turns 55, suggesting that the average consumer in our sample withdraws a large portion of their eligible retirement savings. In line with the predictions from the life-cycle/permanent-income hypothesis, we find modest increases (about 9% of the increase in account balance) in cumulative total spending twelve months later. This increase is driven largely by an increase in debit card spending and is concentrated among low-liquidity consumers. Consumers also use the increase in disposable income to pay down their credit card debt. We do not find any evidence that the average consumer responds by excessively increasing present consumption at the expense of future financial security. Nevertheless, consumers leave a sizeable portion of their withdrawn savings in low-interest accruing bank accounts for at least a year after withdrawal. We provide some suggestive evidence that consumer demographics, especially those related to financial literacy and sophistication, appear to matter for consumers’ withdrawal decisions.

"The Impact of Pension Systems on Financial Development: An Empirical Study" Free Download

SHOUJI SUN, University of International Business and Economics
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JIYE HU, Center for Law and Economics, China University of Political Science and Law
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The impact of pension assets on financial development is both quantitatively and qualitatively. On quantitatively, pension funds increase capital supply to financial market. On qualitatively, pension funds as institutional investors could promote corporate governance, information disclosure and transaction efficiency. Based on regression results of 55 countries and regions, we find that different pension systems formed different size of pension fund; every 1% increase of the pension funds’ assets could bring about 0.15%-0.23% increase of the market value, which could explain cross-countries difference of financial development. Based on panel data analysis, we find that the impact of pension fund on financial development is very significant especially in civil law and underdeveloped countries. By using co-integration analysis and vector auto regression model(VAR)with time series data of Chile, we find positive relationship between pension funds and financial development again. The empirical results indicate that legal origin, endowment and pension fund views are not exclusive but compatible. A country cannot change its legal origin and endowment, but it can change pension policies and reform social security system. A funded pension system with accumulates pension assets could promote a country’s financial development and economic growth.

"Realising the Right to Social Security -- A Desirable and Feasible Floor for All" Free Download

RICHA KASHYAP, KIIT University
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VIVEK SAURAV, Kalinga Institute of Industrial Technology (KIIT University) - KIIT University
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One of the key global problems facing social security today is the fact that more than half of the world’s population is excluded from any type of statutory social security protection. They tend to be part of the informal economy, and are outside the scope of contribution-based social insurance schemes or tax-financed social benefits. This paper shows that the extension of social security is an important element in policies to counteract some of the negative social effects of globalization. It begins by defining the concept of social security, and it examines its linkages with the development process and its impact on poverty reduction. It reviews some key world-wide trends with regard to the extension of social security, in particular concerning tax-financed benefits. It then provides some estimates on the financial affordability of a global social security floor, and shows how the process of extending social security can be supported by the explicit recognition of the right to social security. The article then explores how, at the international level, a global socio-economic floor could be better implemented through a human rights-based approach, and it reviews some of the recent initiatives undertaken by the UN Human Rights Council. It suggests a number of steps to improve the effective implementation of the human rights-based approach. It concludes that such an approach can help achieving the Millennium Development Goals, and provide the framework for global policies for development and poverty eradication beyond 2015.

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About this eJournal

This eJournal distributes working and accepted paper abstracts on all topics related to old age pensions and retirement. This includes papers on social security, employment based pensions and other publicly provided or tax-favored mechanisms for retirement income. The journal welcomes submissions from any discipline and a broad range of topic areas, including benefit adequacy, pension finance, the design and reform of social security and pension systems, retirement policy, and comparative analyses of U.S. pension and retirement issues with those of other countries.

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Directors

SIRN SUBJECT MATTER EJOURNALS

LARRY ATKINS
National Academy of Social Insurance (NASI)
Email: latkins@nasi.org

Please contact us at the above addresses with your comments, questions or suggestions for SIRN-Sub.

Advisory Board

Social Security, Pensions & Retirement Income eJournal

HENRY J. AARON
Bruce and Virginia MacLaury Senior Fellow, Brookings Institution - Economic Studies Program

KENNETH S. APFEL
Director, Management, Finance and Leadership Program - University of Maryland

MERTON C. BERNSTEIN
Walter Coles Professor of Law Emeritus, Washington University in Saint Louis - School of Law

BING YUNG-PING CHEN
Frank J. Manning Eminent Scholar's Chair in Gerontology, University of Massachusetts at Boston - Gerontology Institute

ERIC R. KINGSON
Professor of Social Work and Public Administration, Syracuse University - School of Social Work

OLIVIA S. MITCHELL
Professor of Business Economics and Public Policy, Professor of Insurance and Risk Management, Executive Director, Pension Research Council, University of Pennsylvania - The Wharton School, National Bureau of Economic Research (NBER)

ALICIA MUNNELL
Peter F. Drucker Professor in Management Sciences, Boston College - Center for Retirement Research

JOHN L. PALMER
University Professor, Syracuse University - Maxwell School of Citizenship and Public Affairs

STANFORD G. ROSS
Attorney and Consultant, Arnold & Porter, Chair, Social Security Advisory Board

C. EUGENE STEUERLE
Senior Fellow, Urban Institute

LAWRENCE H. THOMPSON
Senior Fellow, Urban Institute

JACK VANDERHEI
Research Director, Employee Benefit Research Institute (EBRI)

JOHN B. WILLIAMSON
Professor of Sociology, Boston College - Department of Sociology