Pension Freezes and Household Saving Over the Life Cycle

Defined benefit (DB) pension freezes in large healthy firms such as Verizon and IBM, as well as terminations of plans in the struggling steel and airline industries, highlight the fact that these traditional pensions cannot be viewed as risk-free promises from the employeeÂ’s perspective. Indeed, the current turmoil in financial markets and difficult economic outlook for many firms suggest that many more pension plans could be frozen soon. In this preliminary paper we develop an empirical dynamic programming framework to investigate household saving decisions in a model economy with freezeprone DB pensions. The model incorporates important sources of uncertainty facing households, including asset returns, employment, income, and mortality, as well as pension freezes. Applying a compensating variation measure of welfare, we find that pension freezes reduce welfare by a maximum of about $6,000 for individuals with a high school degree and about$2,000 for individuals with a college degree. We close by highlighting a few important issues that are missing from our preliminary analysis, including a labor supply decision and the effects of market-clearing conditions in the labor market. We hope to address these issues in future work.

Does Health Affect Portfolio Choice?

Previous studies find a strong and positive empirical connection between health status and the share of risky assets held in household portfolios. But is this relationship truly causal, in the sense that households respond to changes in health by altering their portfolio allocation, or does it simply reflect unobserved differences across households? We find that the link between health and risky assets depends crucially on the econometric treatment of unobserved heterogeneity. Once we account adequately for unobserved household differences, we find no statistically significant effect of health status on either portfolio allocations or ownership among older households (those with respondents 70 and older) in the Health and Retirement Study. Younger households, in contrast, do seem to adjust their portfolios on both the extensive and intensive margins in response to health shocks.Household portfolios, Health, Risk

How important is pro-social behaviour in the delivery of public services?

A number of papers have posited that there is a relationship between institutional structure and pro-social behaviour, in particular donated labour, in the delivery of public services, such as health, social care and education. However, there has been very little empirical research that attempts to measure whether such a relationship exists in practice. This is the aim of this paper. Including a robust set of individual and job-specific controls, we find that individuals in the non-profit sector are significantly more likely to donate their labour, measured by unpaid overtime, than those in the for-profit sector. We can reject that this difference is simply due to implicit contracts or social norms. We find some evidence that individuals differentially select into the non-profit and for-profit sectors according to whether they donate their labour.pro-social behaviour; public services; donated labour; motivation

Realistic Ionizing Fluxes for Young Stellar Populations from 0.05 to twice solar metallicity

We present a new grid of ionizing fluxes for O and Wolf-Rayet stars for use with evolutionary synthesis codes and single star H II region analyses. A total of 230 expanding, non-LTE, line-blanketed model atmospheres have been calculated for five metallicities (0.05, 0.2, 0.4, 1 and 2 solar) using the WM-basic code of Pauldrach et al. (2001) and the CMFGEN code of Hillier & Miller (1998). The stellar wind parameters are scaled with metallicity for both O and W-R stars. We incorporate the new models into Starburst99 (Leitherer et al. 1999) and compare the ionizing outputs with Schaerer & Vacca (1998) and Leitherer et al. (1999). The changes in the output ionizing fluxes are dramatic, particularly below 228 A. We also find lower fluxes in the He I continuum for Z > 0.4 solar and ages < 7 Myr because of the increased line blanketing. We test the accuracy of the new models by constructing photoionization models. We show that for the dwarf O star grid, He I 5876/H beta decreases between Z = 1 and twice solar in a similar manner to observations (e.g. Bresolin et al. 1999) due to the increased effect of line blanketing. We therefore suggest that a lowering of the upper mass limit at high abundances is not required to explain the observations. For the case of an instantaneous burst, we plot the softness parameter "eta prime" against the abundance indicator R_23. The new models are coincident with the data of Bresolin et al. (1999), particularly during the W-R phase, unlike previous models which over-predict the hardness of the ionizing radiation.Comment: 21 pages, 15 postscript colour figures, includes mn2e.cls. To be published in MNRAS. Revised version containing modifications to Tables 1-

A New Look at the Wealth Adequacy of Older U.S. Households

We examine the current wealth adequacy of older U.S. households using the 1998-2006 waves of the Health and Retirement Study (HRS). We find that the median older U.S. household is reasonably well situated, with a ratio of comprehensive net wealth to present value poverty- line wealth of about 3.9 in 2006. About 18 percent of households, however, have less wealth than would be needed to generate 150 percent of poverty-line income over their expected future lifetimes. We see similar patterns of wealth adequacy when we examine ratios of annualized comprehensive wealth to pre-retirement earnings. Comparing the leading edge of the baby boomers in 2006 to households of the same age in 1998, we find that the baby boomers show slightly less wealth, in real terms, than their elders did, but still have appear to have adequate resources at the median. Moreover, we find a rising age profile of annualized wealth, even within households over time and after controlling for other factors, suggesting that older households are not spending their wealth as quickly as their survival probabilities are falling.

Rust fungi on ferns

Rust fungi quite often parasitise species of fern, though they can be inconspicuous and are often overlooked. This article gives an overview of the species known from Britain and what they look like, and seeks to encourage recorders to take a closer look at ferns and look out for their rusts

A Climatology of Tropospheric Zonal-Mean Water Vapor Fields and Fluxes in Isentropic Coordinates

Based on reanalysis data for the years 1980–2001 from the European Centre for Medium-Range Weather Forecasts (ERA-40 data), a climatology of tropospheric zonal-mean water vapor fields and fluxes in isentropic coordinates is presented. In the extratropical free troposphere, eddy fluxes dominate the meridional flux of specific humidity along isentropes. At all levels, isentropic eddy fluxes transport water vapor from the deep Tropics through the subtropics into the extratropics. Isentropic eddy fluxes of specific humidity diverge near the surface and in the tropical and subtropical free troposphere; they converge in the extratropical free troposphere. Isentropic mean advective fluxes of specific humidity play a secondary role in the meridional water vapor transport in the free troposphere; however, they dominate the meridional flux of specific humidity near the surface, where they transport water vapor equatorward and, in the solstice seasons, across the equator. Cross-isentropic mean advective fluxes of specific humidity are especially important in the Hadley circulation, in whose ascending branches they moisten and in whose descending branches they dry the free troposphere. Near the minima of zonal-mean relative humidity in the subtropical free troposphere, the divergence of the cross-isentropic mean advective flux of specific humidity in the descending branches of the Hadley circulation is the dominant divergence in the mean specific humidity balance; it is primarily balanced by convergence of cross-isentropic turbulent fluxes that transport water vapor from the surface upward. Although there are significant isentropic eddy fluxes of specific humidity through the region of the subtropical relative humidity minima, their divergence near the minima is generally small compared with the divergence of cross-isentropic mean advective fluxes, implying that moistening by eddy transport from the Tropics into the region of the minima approximately balances drying by eddy transport into the extratropics. That drying by cross-isentropic mean subsidence near the subtropical relative humidity minima is primarily balanced by moistening by upward turbulent fluxes of specific humidity, likely in convective clouds, suggests cloud dynamics may play a central role in controlling the relative humidity of the subtropical free troposphere