This paper investigates fiscal sustainability in an overlapping generations economy with endogenous growth coming from human capital formation through educational spending. We assess how budgetary imbalances affect economic dynamics and the outlook for economic growth, thereby providing a rationale for fiscal rules ensuring sustainability. Our results show that the appropriate response of fiscal policy to temporary shocks is not trivial in the absence of fiscal rules. Fiscal rules allow for a timely reaction, thereby avoiding possibly disruptive fiscal adjustment in the future: the more adjustment is delayed, the larger its necessary scale is. We perform a rough calibration of the model to simulate the effects of a demographic shock (change in the population growth rate) under different fiscal policy scenarios.

Over the last 25 years, the United States has seen a dramatic shift in the private sector away from defined benefit plans and towards defined contribution plans. While commentators constantly cite an increase in labor mobility as a major reason for the shift in the private sector from defined benefit to defined contribution plans, researchers to date have not been able to document any difference in mobility by pension type. This study argues that the inability to find such a relationship stems from ignoring the important role of job tenure. Using data from the Survey of Income and Program Participation (SIPP) and the Panel Study of Income Dynamics (PSID), the results of duration analyses that include the interaction of job tenure and pension type reveal that workers with between five and ten years of tenure at a firm are 23% more likely to leave a job with a defined contribution plan than with a defined benefit plan. This difference is consistent with differences in the timing of benefit level entitlement between the two types of plans.

Following the methodological approach taken by Ibbotson and Kaplan (2000), we provide evidence of a major contribution of strategic asset allocation to Spanish equity personal pension plan performance, finding that on average more than 90% of variability of returns over time, and about 70% of the variation of returns among plans, are explained by strategic policy.

Furthermore, we also have evidence that survivor and look-ahead bias detected in previous research have very little impact on the conclusions about the importance of asset allocation on the variability of returns over time.

The importance of asset allocation to explain the variability of returns over time is quite similar for the different investment vocations considered in our study, Euro zone and global equity. Very similar results are also found when we consider the size of the Spanish plans as an explanatory factor for the contribution of asset allocation to performance.

Finally, the value that active management adds to the mere passive tracking of the strategic policy is not statistically different to the management costs of the plans.

It has been argued whether a transfer policy for elderly people should be in kind or in cash. This paper presents a rationale to answer the question in an endogenous growth model with a two-way intrafamily transfer in middle age, education for the child as an inter-vivos transfer, and informal parental care in exchange for a bequest. We have two analytical results. First, a transfer in cash, such as a public pension, prevents economic growth because a strategic behavior concerning caregiving generates a disincentive effect on education. Second, a transfer in kind, such as public formal care, promotes economic growth because the valuation of the service generates an additional benefit of education, which dominates the disincentive effect. Our results show that old age support should be in kind rather than in cash in the context of economic growth and also welfare if bequests are strategic.

The theory of equalizing differences predicts that workers trade pay for benefits, but empirical confirmation of such tradeoffs is rare. This study investigates the extent to which chief executive officers (CEOs) trade pay for pension benefits. For a sample of S&P 500 CEOs, I find that an additional dollar of pension benefits is associated with a 48 cent decrease in pay. Although the tradeoff estimate is significantly different from zero, it is also significantly less than the anticipated rate of dollar-for-dollar, especially for CEOs with relatively more bargaining power over their boards of directors. This implies that the implicit price of pension benefits decreases with the CEO's bargaining power, so pooling datasets on CEOs with varying degrees of power blurs the size of the pay–pension tradeoff.