Romp, W. and Beetsma, R. (2023). OECD Pension reform: the role of demographic trends and the business cycle European Journal of Political Economy, 77.
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Affiliated authorsRoel Beetsma, Ward Romp
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Publication year2023
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JournalEuropean Journal of Political Economy
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 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.