OECD pension reform: The role of demographic trends and the business cycle

Ward Romp and Roel Beetsma

European Journal of Political Economy, 2023, vol. 77, issue C

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. The OECD-wide demography only explains the general reform trend. We rationalize 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.

Keywords: Pension reform measures; Narrative identification; Expansion; Contraction; Old-age dependency ratio; Business cycle indicators; Adjustment costs (search for similar items in EconPapers)
JEL-codes: H55 H62 J11 J26 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:77:y:2023:i:c:s0176268022000787

DOI: 10.1016/j.ejpoleco.2022.102280

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