Baugniet: The protection of occupational pensions under European Union law on the freedom of movement for workers

ABSTRACT:

Occupational pensions are a key part of the pension system in many EU Member States where they provide workers with social protection in retirement. Their relevance should increase given Europe’s old-age pensions crisis. However, occupational pensions are characterised by the complexity and diversity of benefit structures, financing methods and membership rules. This conceptual mosaic has led to different categorisations at national and EU level although solidarity at work and dignity in retirement remain at the heart of European pension systems.

The EU’s new legal landscape supports the social vocation of the free movement of workers. Social security rights are already protected under Article 48TFEU and Coordination. This thesis argues that EU law must protect migrant workers’ occupational pension rights. Member States are clearly facing common demographic, economic, social and political challenges. Moreover, the notion of occupational pension in EU law supports its characterisation as social protection. The justification of a social rationale to the free
movement of workers is based on fundamental rights, the EU’s social objectives and values as well as the requirement of ‘social protection mainstreaming’ under EU law.

The second part of this thesis claims that EU law has historically failed to deliver adequate protection of migrant workers’ occupational pension rights, stemming from a longstanding regulatory gap in which the EU’s legislative process has been hamstrung by institutional constraints. Positive integration has remained limited but a recent breakthrough in secondary legislation will bring a new social protection dimension to the free movement of workers, albeit one based on minimum requirements. Negative integration has also been limited, especially in horizontal situations despite recognition of the indirect effect of Article 45TFEU. However, fundamental rights are capable of providing a tool for the interpretation of the free movement of workers to ensure a more holistic respect for their social protection.

 

Available for download here.

Auerbach: Fiscal Uncertainty and How to Deal with It

Summary:

 

Long-term projections of the federal budget show significant future imbalances, but these projections are enormously uncertain. Some argue that this uncertainty means we should pay less attention to the long-term budget projections, so as to avoid taking painful measures that may prove to be unnecessary. But in general, the appropriate response to uncertainty is instead to take more action now, as a precautionary measure against the possibility of worse-than-expected outcomes. “What is clear is that hoping for a better  future does not constitute an appropriate policy response to uncertainty, and waiting until the size of the problem is known is waiting too long.”

Much of the uncertainty in the short and medium run deficit is related to the business cycle. For the long run, the main sources of budget uncertainty over the next 25 years are the rate of productivity growth, the interest rate on the federal debt, and the rate of excess health cost growth. Whether these factors move in a favorable or unfavorable direction will determine the nature and extent of the fiscal response needed for stabilizing the national debt as a share of GDP. A possibly unfavorable outcome should weigh more heavily in future planning than should the opportunity cost of saving now if outcomes turn out to be better than expected. The United States should actively respond to this uncertainty by increasing its rate of saving, either through a reduction in spending, an increase in taxes, a reduction in the size of implicit government liabilities, or some combination of these actions. A precautionary savings buffer would allow for longer-term planning, more flexibility to meet economic shocks, and would reduce the need to increase marginal tax rates in the face of budget pressures.

More effectively conveying uncertainty, perhaps by requiring the Congressional Budget Office to include a quantitative assessment of the degree of uncertainty present in its forecasts, would be a step in the right direction towards addressing the uncertainty involved with fiscal policymaking. Another policy option would be to subject the government budget to some sort of a “stress test,” in order to determine the government’s ability to meet its needs if unfavorable conditions arise. Finally, if automatic adjustments were used to provide budget stability and ensure appropriate risk-sharing across generations, it would reduce the need for Congress to continually make changes to legislation in response to changes in circumstances.

 

Available for download here.

Romer & Romer: TRANSFER PAYMENTS AND THE MACROECONOMY – THE EFFECTS OF SOCIAL SECURITY BENEFIT INCREASES, 1952–1991

ABSTRACT:

From the early 1950s to the early 1990s, increases in Social Security benefits in the
United States varied widely in size and timing, and were only rarely undertaken in
response to short-run macroeconomic developments. This paper uses these benefit
increases to investigate the macroeconomic effects of changes in transfer payments.
It finds a large, immediate, and statistically significant response of consumption to
permanent benefit increases. The response appears to decline after about six months,
however, and there is no clear evidence of effects on industrial production or
employment. These effects differ decidedly from the effects of relatively exogenous
tax changes: the impact of transfers is faster, but much less persistent and much
smaller overall. Finally, we find strong statistical and narrative evidence of a sharply
contractionary monetary policy response to permanent benefit increases that is not
present for tax changes. This may account for the lower persistence of the
consumption effects of transfers and their failure to spread to broader indicators of
economic activity.

 

Available for download here.

Helgason: Governance of United Nations Development: Recharging multilateral cooperation for the post-2015 era

Executive Summary:

The universal post-2015 development agenda, to be adopted by the General Assembly in September 2015, will constitute a significantly different mission for United Nations Development than the current one driven by the Millennium Development Goals, both in terms of strong focus on the integration of the economic, social and environmental pillars of sustainable development but also because of the increased emphasis on global challenges. The responsibility for achieving the MDGs, in comparison, was primarily located at the domestic level of developing countries with international support. At the outset of the post-2015 era, the distinction between country and global level development challenges has also become less-and-less obvious. The world has seen an increasing trend in recent years of environmental, health and financial disturbances in one geographical area being cascaded over national borders and amplified into systemic risks for everyone. Development cooperation is increasingly called upon to help developing countries to benefit from globalization, as well as to mitigate its negative impact by supporting the development of policies and institutions to build resilience.

As the functions of UN Development change in the post-2015 era, the organizational model and governance capacity of the Organization will need to be adapted to meet the new requirements. A shift from the present organizational model of specialization to one characterized by greater emphasis on integration in response to the demands of the post-2015 development agenda, for example, will require UN development to develop stronger capacity for horizontal governance and coordination at the intergovernmental and interagency levels. This poses several challenges with implications for governance:

Firstly, the post-2015 development agenda with significant focus on the integration of country and global development action will require innovations in the application of the principles of sovereignty and global responsibility in governance of UN Development;

Secondly, UN Development will increasingly have to work as one in an environment characterized by growing diversity of both national development experiences and sources of financing. This will require UN Development to develop strong governance capacity for internal and external coordination;

Thirdly, in the post-2015 era, UN Development will need to develop an organizational capability anchored in integrated approaches that reduce duplication and fragmentation and enable entities to exploit opportunities for synergy in programming and operations.

 

Available for download here.

Mauboussin & Callahan: A Long Look at Short Termism

ASBTRACT:

Short-termism is said to plague all parties in the investment community, including investment managers, companies, and investors. However, it is very difficult to prove.
To assess and evaluate the impact of market short-termism, the right level of analysis is not what individuals say but rather what the stock market does. For many companies, a contraction in time horizon is a proper response to economic reality. Corporate executives and investors who suffer from short-termism are partners in a dance who are attracted to one another based on their characteristics.
The holding period that is relevant in portfolio construction is the time an investor is exposed to an asset class, not the turnover for a particular stock or fund. We provide specific recommendations to deal with the pressures of short-termism for investment managers, companies, and investors.

 

Available for download here.

Höpner, Petring, Seikel & Werner: Liberalization Policy – An Empirical Analysis of Economic and Social Interventions in Western Democracies

ABSTRACT:

Political-economic classics of different schools agreed that capitalism inherently and inevitably leads to a decline of market principles. Analyzing indicators of liberalization policies for 21 OECD-countries in five economic and social policy fields, we demonstrate that Western industrialized countries are subject to a convergent trend towards market-creating policies. This stands in stark contrast to the theoretical expectations of classical works in the field of political economy. Since the first half of the 1980s at the latest, Western democracies have entered a new phase of economic liberalization. From a methodological perspective, our findings suggest that the methods for the causal analysis of convergent liberalization policies cannot be identical with the methods that have been used for analyzing the development and consolidation of the varieties of capitalism in the postwar era.

 

Available for download here.

Case Study: Randazzo, Bui, and Gilroy on Pension Debt – Omaha's Billion Dollar Problem

Summary:

The city of Omaha pension system’s two plans are currently facing four problematic trends:

1. Pension Benefit Promises are Growing Faster than Pension Assets
2. Omaha Has Been Systematically Underfunding Its Pension Systems
3. Pension Debt Has Nearly Tripled Over the Last 10 Years
4. Pension Costs are Consuming More and More Taxpayer Resources
This brief discusses how these trends have been caused by poor actuarial assumptions and irresponsible public policy decisions. Omaha is using an unrealistic assumed rate of return on its investments, and is inappropriately depending on savings from the recently adopted deferred retirement option plan for current employees. The only real way to reform Omaha’s public employee pension plans is to adopt a new system that is not wholly reliant
on the speculative forecasts of financial risk professionals.

 

Available for download here.

Bossone: Secular Stagnation

ABSTRACT:

This study analyzes the emergence of secular stagnation as the consequence of a rise in the preference for liquidity. Such a rise is caused by a persistent set of pessimistic expectations. This study also investigates the effectiveness of a broad range of demand-management policies in dealing with secular stagnation. To obtain these results, this study uses a model where agents derive utility from holding assets of different degrees of liquidity. In this environment, rational expectations interact with changes in market sentiment, to produce secular stagnation.

 

Available for download here.

Lazzarini & Musacchio: State Ownership and Firm-level Performance

ABSTRACT:

State-owned enterprises (SOEs) remain widespread in various countries even after decades of privatization and liberalization reforms. In this paper we analyze a large dataset of listed SOEs, both majority- and minority-owned, covering several countries and industries between 1997 and 2012. We compare these SOEs to a sample of private firms using matching methods combined with differences-in-differences estimation to control for the endogenous choice of state ownership. In line with arguments proposing an inherent “liability of stateness,” we find that SOEs exhibit significant performance gaps—i.e., they underperform private firms with similar characteristics based on indicators of profitability and efficiency—especially when these firms are subject to external changes that require rapid adjustment or that increase the temptation of the government to intervene (namely, economic recessions and election years). However, these negative effects are relatively less relevant in the case of minority SOEs. Furthermore, adopting novel techniques to gauge heterogeneous treatment effects, we find some evidence of negative selection in the choice of state ownership: firms more likely selected as SOEs tend to have a larger performance gap around recessions, compared to private firms. Although the effect of elections seems to disappear in developed economies, majority-owned SOEs in those economies still exhibit significant performance gaps around events of strong economic downturn.

 

Available for download here.