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OECD Pension Reform: it is the business cycle, not the demography!

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  • Beetsma, Roel
  • Romp, Ward

Abstract

Using a new real-time dataset from Beetsma et al. (2020) containing all pension reform measures in 23 OECD countries between 1970 and 2017, we demonstrate that, in contrast to what one might a priori expect, the timing of pension reform measures coincides with business cycle shocks and not with current or projected demographic shocks. We rationalise this finding using a political-economy model with two-sided adjustment costs to explain a lack of response of pension reform measures to changes in demographic indicators.

Suggested Citation

  • Beetsma, Roel & Romp, Ward, 2021. "OECD Pension Reform: it is the business cycle, not the demography!," CEPR Discussion Papers 16451, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16451
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    More about this item

    Keywords

    Pension reform measures; Narrative identification; Expansion; Contraction; Old-age dependency ratio; Business cycle indicators; Adjustment costs;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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