The biggest issue for public pension policy design is the misalignment of interests between policymakers and other constituencies. Using analytic frameworks, policymakers, union leaders, and other stakeholders can analyze alternative policies.
Using the model developed in earlier briefs, the welfare consequences of Rhode Island’s recent pension reforms are analyzed. This stylized example suggests that Rhode Island-style pension reform can improve economic welfare for both taxpayers and beneficiaries.
The share of women who are top earners has increased in past decades. Women made up 1.9% of the top 0.1% of earners in the U.S. between 1981 and 1985, according to research by Fatih Guvenen, Greg Kaplan and Jae Song.
Join us on Thursday, August 22 for a conversation with the Four Horsemen of Minnesota Economics – Ed Prescott, Tom Sargent, Chris Sims, and Neil Wallace – to explore how their research can help address today’s most pressing economic policy challenges.
Fatih Guvenen, professor of economics at the University of Minnesota, has called this a “use it or lose it” effect. He argues "that a net wealth tax effectively redistributes from those who invest their capital badly to those who find high-return uses for it."
This analysis focuses on how public pension policy choices impact taxpayers. There are potential gains for taxpayers when a defined contribution plan is used instead of a defined benefit plan because taxpayers are funding lower levels of insurance against adverse asset market events.
“Economics is a tool to look at public policy from a more objective view,” says Dasom Ham, an undergraduate economics major at the University of Minnesota. After three years at the University, Ham is ready to pursue a PhD in economics and influence public policy.
"Chinese goods don’t usually compete with U.S. goods head on — U.S. goods run more high end. But many goods that are made in America are made with Chinese parts. Tariffs make those parts more expensive." Tim Kehoe, Professor of Economics at the University of Minnesota, said this has the same end result: "less competitive U.S. businesses."
Are frictions in the land market hindering the growth of India’s manufacturing sector? Graduate student Aradhya Sood’s research hopes to find the link between land and slow growth in large-scale manufacturing.
“China may suffer more than us because it will sell less in the U.S.,” Kehoe explained. “But they don’t pay the tariffs. We do. Americans will pay more, especially for goods like they sell at Target and Best Buy.”
The scenario of limited access and unaffordability repeats millions of times over throughout the United States, costing working parents opportunities for higher wages and promotions as they grapple with child care, and costing our economy dearly in the process.
"You can’t say something happened in the labor market to cause that big surge in inequality," Fatih Guvenen explained. "Remember," he said, "this is a measure of pay when workers were just starting out. Something in the system is very different before any of them look for their first job."
For decades, the enormous costs of providing public pension benefits to retiring baby boomers have been discernible but too-often deferred – in the United States and across the world. Yet other developed nations, from Canada to Sweden and the Netherlands to New Zealand, offer lessons worth following.
Wealth taxes could even increase the nation’s productivity. Many wealthy people don’t invest their fortunes particularly efficiently earning mediocre returns on their assets. Economist Fatih Guvenen and co-authors have suggested that wealth taxation could help to liberate this unproductive capital for more productive uses.