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

Roel Beetsma and Ward Romp

No 16451, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

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: 2021-08
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