John A. Turner

A Time-Series Analysis on Social Security and Its Effect on the Market Work of Men at Younger Ages

The distortion of the labor/leisure choice by social security during the period the earnings test is in effect is well known. This paper, using a life-cycle asset maximization approach to social security acceptance, shows that the earnings test is not a sufficient cause for such a distortion in the constrained period or over the life cycle. We use time-series analysis to test the net empirical importance of the substitution and wealth effects associated with social security on the market work of younger men and find that hours worked per week would have fallen from 2 to 3 hours since 1936 without the present social security system. Such findings suggest that large savings effects associated with social security are over-estimates.

Private pension policies in industrialized countries : a comparative analysis

trial relations, than what was sufficient for standardized mass production. According to this perspective, as a country becomes more economically advanced and as capital-, technology-, and knowledge-intensive industrial sectors take the place of labor-intensive manufacturing, there should be a transition to mutual commitment HRM policies and cooperative industrial relations institutions. Nobody should be surprised that the material presented in the book does tend to show more progressive industrial relations norms in more advanced nations and firms. It appears that the predominant form of work organization and the level of competence and commitment required from employees rises progressively as we turn from Thailand to Malaysia, and then to Korea and Singapore. Similarly, we find significant advances in work organization and HRM policies when we turn from light manufacturing to automobile production in Thailand, or from garment-making to textiles in Hong Kong. On the other hand, a more careful look at the information makes that simple point less obvious. Deyo tells us that some Japanese-owned auto assemblers in Thailand have been able to achieve international competitiveness by introducing key elements of flexible production systems supported by many of the HRM policies advocated in the lean production literatureeven though Thailand remains at a low level of economic development, the Thai labor movement is almost nonexistent, and even the exceptional high performance firms continue to give priority to cost-cutting tactics in many of their policy choices. At the opposite extreme, Begin tells us that employers in Singapores much more advanced economy enjoy a high degree of financial and numerical flexibility (the ability to easily adjustwage levels and head count). On the other hand, Singaporean blue-collar workers are usually not as skilled as their counterparts in the most successful advanced nations, work is organized into narrow routine jobs, there is a low degree of employee commitment, and operations are poorly integrated. Similarly, Kims study of large Korean man ufacturing firms shows that even the internationally competitive firms in relatively advanced industrial sectors generally fail to effectively use and build upon the human resource potential of their highly educated employees, or to adopt flexible integrated operating systems. The chapters dealing with the affiliates of American and Japanese multinationals in Malaysia and Taiwan also suggest that indulsti ial relations institutions, and the level of economic development at the national level, may have only a limited impact on HRM policies or performance outcomes. Kuruvillas article shows how Malaysias industrialization strategy, with its emphasis on attracting foreign investors through the availability of disciplined, low-cost labor, has rendered Malaysian labor unions weak and ineffective. Nonetheless, the studies of subsidiaries of American and Japanese munltinationals show that the HRM policies, work organization, and performance outcomes in the Malaysian subsidiaries differ only slightly from those in the subsidiaries in Taiwans more advanced economic and political environment. Though this book does not provide a good basis for making comparisons across countries, it does support the general conclusion that tensions remain, regardless of the level of economic or technological development, between policies designed to minimize labor costs and policies designed to cultivate competent and committed employees whose input can be used for mutual gains. In addition, many of the articles provide valuable insights into the process of change within firms, industrial sectors, and nations. The book does not provide (lefinitive answers, but the material it provides on non-Western countries makes a vital contribuition to the literature on industrial relations and international competitiveness.

Securing employer-based pensions : an international perspective

As the worlds population ages, millions will rely on their pension plans as the mainstay of retirement income. This book asks whether supply will meet demand in the new economic order. Pension systems in Germany, Japan, Canada, and the U.S. are compared, along with those in many developing nations. This volume is intended for employees and managers, pension policymakers, actuaries and lawyers, and benefits consultants, all of whom are busy changing their pension structures to meet global challenges. Sensible tax, insurance, and funding policies-as well as investment management and actuarial oversight-are central to building and maintaining a successful public and private pension system. Tracing the interaction of these factors across a variety of environments, Securing Employer-Based Pensions explores the immediate need for increased pension security in retirement systems in both developed and developing nations.

Social Security, Preretirement Labor Supply, and Saving: A Confirmation and a Critique

In an earlier article in theJournal of Political Economy (Burkhauser and Turner 1978), we used time-series data to test the net empirical importance of the substitution and wealth effects of social security on the market work of prime-age men. We found that hours worked per week would have fallen by 2-3 hours without the present social security system. A recent paper by Leimer and Lesnoy (this issue) has shown that the Feldstein (1974) social security wealth variable, which we used in our regressions, was calculated incorrectly. In the light of this finding, we have reestimated our original regressions using the Leimer-Lesnoy corrected social security wealth variables. Our primary regression in table 1 (col. 1), which uses the entire sample period, confirms our original results. Again we find that the work week is 2-3 hours higher than it would have been in the absence of social security, a result empirically significant by conventional standards. Leimer and Lesnoy have made an important contribution to research on social security by correcting a calculation error. Our empirical results, however, raise a fundamental question not discussed in our original paper which requires a reexamination of the empirical methodology found in Feldstein (1974), Leimer and Lesnoy (this issue), and other papers. The facile assumption that the effect of social security on saving can be directly determined from a consumer-expenditure function we show leads to an overstatement of social securitys negative effect on saving.

Extending pension and savings scheme coverage to the informal sector: Kenya's Mbao Pension Plan

The Mbao Pension Plan is a voluntary individual account savings plan to which all workers in Kenya may contribute without regard to income or age. It is designed to provide a programme that is suitable for the unique nature of the informal sector and to encourage a savings culture for those workers. The key innovation is that low�?income workers can easily make small contributions at relatively low cost, considering the small contributions and small account balances. Participants can conveniently make contributions anytime and anywhere using their cell phones. This savings innovation is made possible by technological innovations that have reduced the costs of cell phones and airtime, and by the entrepreneurial innovation of mobile money. The plan is provided through private�?sector businesses.

How Societies Mix Public and Private Spheres in their Pension Systems

In this book a distinguished group of contributors discuss the changing political economy of pension reform. They focus on those countries which have launched a significant reframing of their pension system. Each chapter provides a detailed review of recent pension reforms and offers institutional evidence of the extent to which these reforms suggest a redirection of the welfare state towards a more public-private mix of policies. The countries were selected to represent the variety of new directions which mature industrial countries as well as countries in transition have taken.

Union-Nonunion Differences in Pension Fund Investments and Earnings

The authors use IRS data to compare the composition, risk, and rate of return to union pension investments with those of nonunion pension funds. They find almost no differences between single-employer union and single-employer nonunion funds. Collectively bargained, multiemployer funds, however, held less risky portfolios than either union or nonunion single-employer funds. Multi-employer funds averaged a lower risk-adjusted rate of return for 1977–80, but performed as well as nonunion investments from 1981 to 1986. Thus, little evidence is found that “social investing,” most likely to occur in multi-employer funds, has increased the risk or consistently reduced the returns of union pension funds.

Work, Family, State and Market: Income Packaging for Older Households

We use the concept of “income packaging” to explore the economic position of older people historically and comparatively. Income packaging focuses on the evolving economic role of the State in occupational pensions, earnings and assets. By contrast, the life course perspective focuses on the relations across generations. While these approaches differ in emphasis, they also overlap and are complementary. The idea of income packaging was first developed by Rein, Rainwater and Schwartz (1986) in a comparative study of three mature welfare states (the United Kingdom, Sweden and the United States) in order to highlight the importance of examining both the source and the level of income and to correct for the neglect of enterprise and the overemphasis on the development of the welfare state. The concept has been used by historians to describe the coping strategy of older people in the nineteenth and early twentieth centuries. Drawing on these historical studies, we examine the evolution of incomepackaging among older people over time and across countries.

Mandatory Defined-Contribution Pension Systems: Progress — or Regression?

While mandatory defined-contribution pension systems can be designed so that they are neutral or progressive in their effects on income distribution, a number of features they commonly contain are regressive. In determining whether a defined-contribution system is neutral or regressive, it is important to examine its actual features rather than a stylized version. Because administrative costs for managing financial accounts often are the same for large- or small-value accounts, there is a tendency for for-profit financial institutions to charge flat-rate fees or fees that, in relation to account balances, are higher for small accounts than for large accounts. These fees are one of the reasons why defined-contribution system tend to be regressive.

Regulating Financial Advice: The Conflicted Role of Record Keepers in Pension Rollovers

Rollovers from 401(k) plans to IRAs have resulted in IRAs having more assets than 401(k) plans. Roughly 40% of assets rolled over to IRAs are managed by the 401(k) plan record keeper. Record keepers know when employees have changed jobs, often contacting them to urge them to roll over to an IRA managed by the record keeper. Because they know the fees their clients are paying in 401(k) plans, they know when advising a rollover will likely result in clients paying higher fees. While much of the literature relating to the DOL fiduciary rule is on how to meet the rule, greater attention should be paid to the steps advisers and financial services firms will take to avoid it. The author shows that it is easy for record keepers to reword their communications to avoid their being considered as advice while still effectively influencing the decisions of the recipients of the communications.