A new approach to raising Social Security’s earliest eligibility age
While Social Security?s Normal Retirement Age (NRA) is increasing to 67, the Earliest Eligibility Age (EEA) remains at 62. Similar plans to increase the EEA raise concerns that they would create excessive hardship on workers who are worn-out or in bad health. One simple rule to increase the EEA is to tie an increase to the number of quarters of covered earnings. Such a provision would allow those with long work lives?presumably the less educated and lower paid?to quit earlier. We provide evidence that this simple rule would not satisfy the goal of preventing undue hardship on certain workers. ...
Potential effects of the Great Recession on the U.S. labor market
The effect of the Great Recession on the U.S. labor market will likely persist even after economic output has recovered. Although the recession did not greatly change the relative probabilities of job loss for different types of workers, the long-run impact will vary by worker characteristics. Workers who lost long-term jobs during the Great Recession are at increased risk of future job loss due to the loss of protection afforded by long-term job tenure, and older displaced workers are at a relatively high risk of prolonged spells of unemployment and premature retirement. The recent increase ...
U. S. labor supply in the twenty-first century
The American labor force will be transformed as the twenty-first century unfolds, a change that will confront policymakers and business firms with new challenges and new opportunities. The impending slowdown of labor force growth that will accompany the retirement of the baby boom generation already is playing a central role in national debates over the future solvency of Social Security and Medicare, as well as U.S. immigration policies. But labor supply changes will be influenced by other dimensions as well. In the coming decades, American workers are likely to be, on average, older and ...
TIPS scorecard: are TIPS accomplishing what they were supposed to accomplish?: can they be improved?
In September 1997, the U.S. Treasury developed the TIPS market in order to achieve three important policy objectives: (1) to provide consumers with a class of assets that allows for hedging against real interest rate risk, (2) to provide holders of nominal contracts a means of hedging against inflation risk, and (3) to provide everyone with a reliable indicator of the term structure of expected inflation. This paper evaluates progress toward the achievement of these objectives and analyzes prospective ways to better meet these objectives in the future, by, for example, extending the maturity ...
The role of economic, fiscal, and financial shocks in the evolution of public sector pension funding
Many studies have documented the pervasive underfunding of public sector pension plans in the United States in recent years. The deterioration of the funded status of public pension plans coincided with severe fiscal crises that state and local governments experienced in the 2000s. This development has led to a suspicion that state and local governments have decreased employer pension contributions as a backdoor means of running fiscal deficits. In this paper, the authors investigate the extent to which this phenomenon has occurred. They estimate panel data regressions using the Boston ...
Role of firms in job creation and destruction in U.S. manufacturing
Research in recent years has documented extensively the fact that labor markets are characterized by large and pervasive flows of jobs among places of employment. However, virtually none of this research pertains to the role of the firm and its decisions in determining job creation and destruction. Previous research and data-gathering efforts have focused on employment at individual physical locations called establishments, or plants. This neglect leaves fundamental questions regarding the role of firms unanswered. Job reallocation occurring within firms may have very different causes and ...
Job creation, job destruction, and international competition: job flows and trade: the case of NAFTA
This paper is a chapter in our forthcoming monograph, Job Creation, Job Destruction, and International Competition (W.E. Upjohn Institute 2003), and expands on the ideas advanced in Klein, Schuh, and Triest (2003). The chapter is a case study of the impact of the North American Free Trade Agreement (NAFTA) on the U.S. labor market in three industries: textiles and apparel, chemicals, and automobiles. NAFTA significantly altered the trade environment for these industries and contributed to changes in the bilateral export-import structure among the United States, Canada, and Mexico. Our ...
Investment and employment by manufacturing plants
The preceding article analyzed the determinants of investment at the macroeconomic level. In general, analysis of investment at this degree of aggregation implies that all firms in the economy react similarly to the same macro-level variables. Yet, examining macro data may obscure a great deal of variation in the forces that affect different firms, thus making quantification of the impact of these forces difficult. Since different types of firms face an array of different constraints, the authors analyze employment and investment at manufacturing plants at a finer level of distinction than ...
Seismic shifts: the economic impact of demographic change: an overview
Most economic developments are hard to predict. Considerable uncertainty surrounds forecasts for output growth, inflation, and unemployment a year from now, for instance. But demographic developments are different in this respect. Although demographic surprises abound, the major trends build slowly, and the broad contours of medium-term outcomes become discernible well in advance.