Welfare reform and New York City's low-income population - commentary

Welfare ; Poverty

Why Is Insured Unemployment So Low?

macroeconomics, insured unemployment

The work response to a guaranteed income: a survey of experimental evidence

Public welfare ; Public policy ; Income distribution ; Labor supply ; Econometric models

The Rationale for Fundamental Pension Reform in Germany and the United States: An Assessment

This paper considers the arguments for fundamental pension reform in Germany and the United States. The two countries have recently made or are considering reforms that would reduce the generosity of the traditional, pay-as-you-go pension system. Some or all of the lost benefits would be replaced by pensions from newly created individual, defined-benefit, retirement accounts. The paper addresses three questions that are relevant for assessing fundamental reform: (1) Should the pension system move toward advance funding of future benefit obligations? (2) What financial assets should be accumulated to back future pension promises? (3) Should the existing system be reformed to include individual retirement accounts?

Demographic shocks and global factor flows: discussion

A paper-giver's job is straightforward. It is to describe some interesting phenomenon or mechanism or effect, make large claims about its importance for our understanding of the world, and then marshal evidence to show these claims are true. ; Jeffrey Williamson has done his job wonderfully well. He knows much more about economic history than I do, so I can only defer to his deep knowledge. But I find it surprising that the mechanism described in this paper accounts for such a large fraction of the phenomena examined. Let me oversimplify the paper by baldly stating its hypothesis. Then I will make a couple of remarks about the findings.Demography ; Economic conditions

Lessons of the Financial Crisis for the Design of National Pension Systems

The recent financial crisis and historical record suggest important lessons about the design of national pension systems. First, wide fluctuation in asset returns makes it hard for well-informed savers to select a saving rate or a sensible investment strategy for DC pensions. Workers who follow identical investment strategies but who retire a few years apart can receive DC pensions that are startlingly unequal. Second, it is hard for ordinary workers, as opposed to optimal planners, to make sensible choices about portfolio allocation. Their investment errors mean that actual returns fall short of the theoretical returns that could be earned by a well-informed, disciplined investor.

Social Security Privatization and Financial Market Risk: Lessons from U.S. Financial History

A popular proposal for reforming social security is to supplement or replace traditional publicly financed benefits with a new system of mandatory defined-contribution private pensions. Proponents claim that private plans offer better returns than traditional social security. To achieve higher returns, however, contributors are exposed to extra risks associated with financial market fluctuations. This paper offers evidence on the extent of these risks by considering the hypothetical pensions U.S. workers would have obtained between 1911 and 1999 if they had accumulated retirement savings in individual accounts. The 89 hypothetical contributors are assumed to have identical careers and to contribute a fixed percentage of their wages to private investment accounts. Contributors differ only with respect to the stock market returns, bond interest rates, and price inflation they face over their careers. These differences occur because of the differing start and end dates of workers' careers. The analysis demonstrates that returns under private plans would usually have been good, but that financial market risks in a private account system are empirically quite large. Some of these risks are also present in certain types of public retirement system, but a public system has one important advantage over private pensions. Because public social security is backed by the taxing and borrowing authority of the state, it can spread risks over a much larger population of potential contributors and beneficiaries, including contributors and beneficiaries in several generations.