Sudipto Banerjee

Employment Trends by Age in the United States Why Are Older Workers Different

In the 1960s, 1970s, and 1980s, male employment rates were declining or flat at all ages, and female employment rates were rising or flat at all ages. But employment trends diverged more recently, with employment rising at older ages and falling at younger ages. We estimate labor supply models for men and women, allowing differences in behavior across age groups. The results indicate that changes in the educational composition of the population, the increase in age at first marriage, and Social Security reforms can account for a modest proportion of the divergence. However, much of the divergence remains unexplained.

A Piece of the Annuitization Puzzle: The Role of Plan Rules in Annuitization Decisions in DB and CB Plans

In spite of the valuable longevity insurance annuities provide, actual annuitization rates of retiree wealth remain low. Previous studies investigating what economists term the “annuity puzzle” have focused on workplace pension plans because they offer a choice between an annuity and a lump-sum distribution. These studies found large variations in annuitization rates among employer-provided defined-benefit (DB) and cash-balance (CB) plans but did not provide a concise explanation. This article does provide an explanation—in particular, variations in plan rules can explain the variation in annuitization rates. The rates vary directly with the degree of restriction imposed on lump-sum distributions. Plans with no option for a lump-sum distribution have annuitization rates of close to 100%, whereas plans with no restrictions on lump-sum distributions have annuitization rates of between 20% and 40%. Given an unrestricted choice, only a minority of plan participants choose an annuity.

Emerging Nations: Perspectives on Past Success and Future Challenges*

Abstract The emerging economies experienced unprecedented growth between 2001 and 2011. They not only survived the 2008–2009 great recession, but provided the fuel for the global economic engine to get back on the road to recovery. But since then their economies have faltered and the enthusiasm surrounding them has waned. This article discusses some of the reasons that were behind the decade long rise of these economies and the subsequent fall. It also sheds some light on the troubling signs that are now surfacing in these emerging economies and finally suggests some of the key areas where these governments should focus to return to their earlier success.

Can the Risk of Medical Expenditure Explainthe Wealth Trajectories of Elderly Singles

In this article, I analyze the role of precautionary savings as a determinant of the wealth holdings of elderly singles. The novel aspect of the analysis is that the distribution of medical expenditure is allowed to be individual-specific, and the variance of medical expenditure is estimated for each individual using repeated observations on medical expenditure. To address the measurement error problem in medical expenditure, I use an instrumental variable estimator. I construct a simple life-cycle model and show that the coefficient of relative risk aversion can be identified from a log-linearized Euler equation for wealth, using the variation in the risk of medical expenditure. The results imply that precautionary savings can account for up to 56% of the wealth holdings of elderly singles. This means lowering the risk exposure of medical expenses at older ages could significantly alter the retirement asset draw-down rates and strategies.