Précis
New journal from OECD
Pensions and retirement
Attitude and altitude
Feeling that there has been "a lack of international journals dealing specifically with statistical and economic research on business cycles," the Organization for Economic Co-operation and Development recently launched the Journal of Business Cycle Measurement and Analysis.
The introductory essay by the eminent business cycle scholar Victor Zarnowitz succinctly lays out the need for and possible direction of such a journal. After noting that the historical chronologies of business cycles maintained by the National Bureau of Economic Research extend back over two centuries, Zarnowitz establishes that these fluctuations "vary greatly in duration and intensity, less in diffusion, timing and interaction of their many constituent processes."
This leads Zarnowitz to outline two broad research questions. First, are cycles better understood in terms of shocks or imbalances. His own preference seems to lean toward imbalance stories, but he notes the rigorous theoretical attractiveness of models such as linear dynamic equilibrium. Second, is the empirical question of whether or not business cycles are moderating over time. While recent history indicates this might be so, Zarnowitz notes, "Contractions tend to be more frequent and severe in deflationary times than during times of inflation, which helps explain why some moderation of business cycles took place in the last half-century."
Other articles in the issue address survey expectations, modeling interest rates, using qualitative survey data, detecting cyclical turning points, and composite indicators of Swiss manufacturing. The Journal of Business Cycle Measurement and Analysis has an ambitious editorial mission; but, as Zarnowitz concludes, "business cycles are (1) neither dead nor dying, (2) still complex, changing, and misinterpreted, and (3) deserving much further study, better understanding, and more effective counterpolicies."
The evolution of pension plans in the United States—from traditional defined benefit plans toward defined contribution plans—has increased the age at which workers retire, according to a NBER working paper by Leora Friedberg and Anthony Webb. In the early post-World War II period, most pensions were defined benefit plans, which led to sharp declines in retirement ages because such plans encourage workers to retire after a certain point. Since the 1980s, defined contribution plans have become more popular. Defined contribution plans tend to increase the retirement age because the longer an employee works, the more both worker and employer contribute to the pension fund.
Defined benefit plans use a specific predetermined formula for calculating the amount of an employee’s pension benefit at retirement. They generally are funded exclusively by the employers. In defined contribution plans, employers make specified contributions but the amount of the employee’s pension benefit is not specified. They may be funded wholly or partially by employers, and employees often contribute to these funds as well.
Analyzing data from the longitudinal Health and Retirement Study (HRS), Friedberg and Webb conclude that defined contribution plans lead to an increase in the retirement age of nearly 2 years, on average, compared with defined benefit plans. Moreover, the authors suggest that their findings may explain the recent increase in employment rates among people in their 60s, following decades of declines. They expect this trend to continue, as more workers with defined contribution plans reach retirement age and defined benefit plans become largely a thing of the past.
Studies of individuals’ work attitudes and individual performance have generally shown, at best, weak relationships between the two, according to a NBER working paper by Ann Bartel, Richard Freeman, Casey Ichnioski, and Morris M. Kleiner. While that somewhat counterintuitive result may, according to some research, reflect methodological shortcomings in the individual studies, the authors here go beyond that argument to examine the relationship between attitude and performance at the establishment level.
Bartel and her colleagues use a set of employee attitude survey data from a major bank to see, first, if there is a workplace or "group attitude" based on common experiences at different establishments of a multisite firm; and, second, to see if any such worksite specific attitude has an effect on the unit’s performance. They find that the standard deviation of the distribution of actual branch score on the attitude survey is greater than that of the distribution that would be expected if branches were simply random draws from the bank’s employees. Based on this and the results of a more detailed analysis of variance, Bartel and company conclude that there is a workplace effect on how employees view their jobs and employer.
The next question is whether or not that group attitude has an impact on group performance. They found that both net sales and sales growth were positively correlated with the attitude scores of the bank’s branches and employee turnover was negatively related. In addition, low attitude scores were associated with a higher probability of a branch closing.
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