Overview of the Issue

2003 ◽  
Vol 2 (2) ◽  
pp. 97-98
Author(s):  
JEFFREY BROWN ◽  
STEVEN HABERMAN ◽  
MOSHE MILEVSKY ◽  
MIKE ORSZAG
Keyword(s):  
Human Capital ◽  
Older Workers ◽  
Life Cycle Analysis ◽  
Original Research ◽  
Defined Benefit ◽  
Benefit Design ◽  
Oxford University ◽  
Younger Workers ◽  
Defined Benefit Plans ◽  
Defined Benefit Pensions

This issue features three original research articles and an issues & policy article. The first article in the issue is by David McCarthy (Oxford University, UK). A Life Cycle Analysis of Defined Benefit Plans examines optimal benefit design within the context of a lifecycle model. The model finds that the structure of defined benefit plans is unlikely to be optimal for younger workers. The intuition is straightforward: defined benefit pensions depend heavily on the evolution of a worker's human capital and young workers are already heavily exposed to human capital risks. Older workers however may find wage indexed claims to be more valuable as most other human capital uncertainty has vanished.

scholarly journals A life-cycle analysis of defined benefit pension plans

2003 ◽  
Vol 2 (2) ◽  
pp. 99-126 ◽  
Author(s):  
DAVID McCARTHY
Keyword(s):  
Human Capital ◽  
Older Workers ◽  
Pension Plans ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Defined Benefit Plans ◽  
Retirement Policy ◽  
Risk Free Rate ◽  
The Cost ◽  
Defined Benefit Pension Plans

This paper employs a lifecycle model from the consumption–savings literature to examine the tradeoffs between defined benefit and defined contribution pension plans. We examine the effects of varying risk aversion, varying initial income and financial wealth, and varying wage processes (that may be correlated with returns on the risky asset).Results indicate that wage-indexed claims are not an optimal vehicle for retirement policy if the decision to participate is made early in life, because individuals hold most of their wealth in their human capital and would not wish to increase their exposure to income shocks. Later in life, after most of a worker's human capital has been converted to financial assets, defined benefit pension plans help increase diversification by reducing exposure to financial market risk. The access that defined benefit plans provide to annuities markets and possible guaranteed rates of return over the risk-free rate increase the value of defined benefit plans to workers. The model also predicts that wage-indexed claims will be more valuable when equity markets provide low expected returns or are highly variable and when annuity markets are inefficient.The model illustrates two economic functions performed by defined benefit plans. Firstly, DB plans pool individual wage risks. This allows older workers to buy a wage-linked security that increases their exposure to wage risks. Secondly, they create a group annuities market that reduces the cost of adverse selection.

scholarly journals OLDER AUSTRALIAN WOMEN’S HUMAN CAPITAL: PERCEPTIONS OF SKILL LEVELS AND PARTICIPATION IN LEARNING ACTIVITIES

2019 ◽  
Vol 3 (Supplement_1) ◽  
pp. S4-S4
Author(s):  
Philip Taylor
Keyword(s):  
Human Capital ◽  
Older Workers ◽  
Occupational Groups ◽  
Skill Levels ◽  
Fine Grained ◽  
Younger Workers ◽  
Business Cases ◽  
Training Activities ◽  
Capital Development ◽  
Training Opportunities

Abstract While business cases for older workers’ employment stress their value it is well-known that they participate less in training activities than younger workers. Women are at particular risk of not accessing training opportunities. Drawing on a survey of 2500 women aged over 50 we report a fine-grained analysis of the types of training women were undertaking and the factors associated with participation in training. The analysis indicates that training is infrequently undertaken in preparation for a new job and large majorities of women see no need to and are not interested in retraining. This is observed across occupational groups, but more commonly among those with low educational levels. A lack of employer support is much less commonly reported as a barrier to older women’s participating in training. The findings suggest that it is primarily at women themselves that efforts aimed at promoting human capital development need to be directed.

Capital Structure and a Firm's Workforce

2018 ◽  
Vol 10 (1) ◽  
pp. 387-412 ◽  
Author(s):  
David A. Matsa
Keyword(s):  
Human Capital ◽  
Labor Market ◽  
Capital Structure ◽  
Job Security ◽  
Defined Benefit ◽  
Financing Decisions ◽  
Labor Market Frictions ◽  
Workforce Reductions ◽  
Defined Benefit Pensions ◽  
Labor Negotiations

While businesses require funding to start and grow, they also rely on human capital, which affects how they raise funds. Labor market frictions make financing labor different than financing capital. Unlike capital, labor cannot be owned and can act strategically. Workers face unemployment costs, can negotiate for higher wages, are protected by employment regulations, and face retirement risk. I propose using these frictions as a framework for understanding the unique impact of a firm's workforce on its capital structure. For instance, high leverage often makes managing labor more difficult by undermining employees’ job security and increasing the need for costly workforce reductions. But firms can also use leverage to their advantage, such as in labor negotiations and defined benefit pensions. This research can help firms account for the needs and management of their workforce when making financing decisions.

Getting More from Less in Defined Benefit Plans

2018 ◽  
Author(s):  
Daniel W. Wallick ◽  
Daniel B. Berkowitz ◽  
Andrew S. Clarke ◽  
Kevin J. DiCiurcio ◽  
Kimberly A. Stockton
Keyword(s):  
Interest Rates ◽  
Pension Plan ◽  
Defined Benefit ◽  
Portfolio Risk ◽  
Defined Benefit Pension Plan ◽  
Increased Risk ◽  
Investment Returns ◽  
Defined Benefit Plans ◽  
Asset Class ◽  
Reduced Costs

As global interest rates hover near historic lows, defined benefit pension plan sponsors must grapple with the prospect of lower investment returns. We examine three levers that can enhance portfolio outcomes in a low-return world: increased contributions; reduced investment costs; and increased portfolio risk. We use portfolio simulations based on a stochastic asset class forecasting model to evaluate each lever according to two criteria: the magnitude of impact and the certainty that this impact will be realized. We show that increased contributions have the greatest and most certain impact. Reduced costs have a more modest, but equally certain impact. Increased risk can deliver a significant impact, but with the least certainty.

scholarly journals Description of Main Predictors for Taking Sick Leave Associated with Work-Related Eye Injuries in Spain

2021 ◽  
Vol 18 (10) ◽  
pp. 5157
Author(s):  
Sergio Martín-Prieto ◽  
Cristina Alvarez-Peregrina ◽  
Israel Thuissard-Vassallo ◽  
Carlos Catalina-Romero ◽  
Eva Calvo-Bonacho ◽  
...  
Keyword(s):  
Sick Leave ◽  
Older Workers ◽  
Descriptive Study ◽  
Labor Cost ◽  
Eye Injury ◽  
Eye Injuries ◽  
Work Related ◽  
Younger Workers ◽  
Initial Injury ◽  
Type Of Injury

Recent studies in Spain have shown that males, younger workers, and people involved in manual jobs had the highest risk of suffering a work-related eye injury (WREI). This study aims to assess the predictors of sick leave associated with WREI and to compare them with risk factors of initial injury. A retrospective and descriptive study of WREI that causes sick leave of one or more days among workers from an insurance labor mutual company in Spain was conducted over a period from 2008 to 2018. The variables of the study were sex, age, occupation, and type of injury. A total of 9352 (18.6% of 50,265 WREI) cases and 113,395 total days of sick leave were observed, with an estimated EUR 4,994,009.59 of associated labor cost. The main predictors of sick leave related to WREI were found to be female (highest incidence; 25.9 (95% CI (24.8–27.1))), >55 years of age (highest incidence; 20.5 (95% CI (19.3–21.7))), not working in the industry (lowest incidence; 13.8 (95% CI (13.3–14.2))), and not suffering “other disorders of conjunctiva” (lowest incidence; 5.7 (95% CI (4.7–6.8))). The consequences associated with WREI are worse for female and older workers, despite the main risk of suffering WREI being observed in males and younger workers.

scholarly journals Addressing Longevity Risk: How Best to Annuitize Defined Contribution Assets?

2020 ◽  
Vol 4 (Supplement_1) ◽  
pp. 686-686
Author(s):  
Alicia Munnell ◽  
Gal Wettstein ◽  
Wenliang Hou
Keyword(s):  
Social Security ◽  
Longevity Risk ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Economics Of Aging ◽  
Distribution Rules ◽  
Lifetime Income ◽  
The Social ◽  
Defined Benefit Pensions ◽  
Deferred Annuity

Abstract Unlike defined benefit pensions, 401(k) plans provide little guidance on how to turn accumulated assets into income. The key risk that retirees face is outliving their assets. Insurance against such risk is available through several routes, including immediate annuities, deferred annuities, and additional Social Security through delayed claiming. Under this Social Security bridge option, participants would tap their 401(k) for payments equal to their Social Security to delay claiming. This paper compares these three options in simulations against a baseline in which no assets are used to obtain lifetime income. In each option, assets not allocated to purchasing lifetime income are consumed following the Required Minimum Distribution rules. The analysis finds that, when market and health shocks are included alongside longevity uncertainty, the Social Security bridge option is generally the best for households with median wealth. Wealthier households can benefit from combining the bridge option with a deferred annuity. Part of a symposium sponsored by the Economics of Aging Interest Group.

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