by: Huixin Bi and Sarah Zubairy
Download Article

RWP 20-06, July 2020; updated December 2021

We construct a database of public pension policy changes with motivation and im-plementation information for ten OECD countries. Structural pension reforms, moti-vated by long-run sustainability concerns, often come with prolonged phase-in periods. In response to pension retrenchments implemented immediately, people close to retire-ment stay in the work force longer. News about future pension retrenchments with implementation lags, however, is likely to lead this group to exit the labor market. This decline in the labor force participation rate is particularly strong for reforms with long lags, ones that introduce fundamental policy changes, and where citizens have lower trust in the government.

JEL Classification: E62, H30, H55

Article Citation

  • Bi, Huixin, and Sarah Zubairy. 2020. “Public Pension Reform and Fiscal Foresight: Narrative Evidence and Aggregate Implications.” Federal Reserve Bank of Kansas City, Research Working Paper no. 20-06, July. Available at External Linkhttps://doi.org/10.18651/RWP2020-06

Related Research

  • Mertens, Karel, and Morten O. Ravn. 2012. “Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated U.S. Tax Policy Shocks.” American Economic Journal: Economic Policy, vol. 4, no. 2, pp. 145–181. Available at External Linkhttps://doi.org/10.1257/pol.4.2.145

  • Mertens, Karel, and Morten O. Ravn. 2011. “Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks.” Review of Economic Dynamics, vol. 14, no. 1, pp. 27–54. Available at External Linkhttps://doi.org/10.1016/j.red.2010.07.004

  • Romer, Christina D., and David H. Romer. 2016. “Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Increases, 1952–1991.” American Economic Journal: Macroeconomics, vol. 8, no. 4, pp. 1–42. Available at External Linkhttps://doi.org/10.1257/mac.20140348

  • Romer, Christina D., and David H. Romer. 2010. “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks.” American Economic Review, vol. 100, no. 3, pp. 763–801. Available at External Linkhttps://doi.org/10.1257/aer.100.3.763

Author

Huixin Bi

Research and Policy Officer

Huixin Bi is a Research and Policy Officer in the Economic Research Department of the Federal Reserve Bank of Kansas City. Previously, Ms. Bi served as an economist at the Bank …

Read Bio