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  • KDI Journal of Economic Policy, May 2019
  • Date May 31, 2019
  • Language English
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    Equity across Generations and Uncertainty within a Generation: A Welfare Analysis of the National Pension System / Kyooho Kwon
     Ⅰ. Introduction
     Ⅱ. A Macroeconomic Model of the National Pension System
     Ⅲ. Calibration
     Ⅳ. Benchmark Model Simulation
     Ⅴ. An Analysis of Welfare Changes in the National Pension System Improvement Plans
     Ⅵ. Summary and Conclusion
     REFERENCES
     LITERATURE IN KOREAN

    Health Capacity to Work at Older Ages in South Korea: Estimates and Implications for Public Pension Policies / Dohyung Kim
     Ⅰ. Introduction
     Ⅱ. Trends in the Employment Rates of Older Men
     Ⅲ. Estimating the Health Capacity to Work at Older Ages
     Ⅳ. Willingness to Work among Older People and Pensioners
     REFERENCES
     LITERATURE IN KOREAN

    Sales Compensation and Recommendations as the Fund of the Month / Yoonhae Oh
     Ⅰ. Introduction
     Ⅱ. Literature Review
     Ⅲ. Background and Hypothesis
     Ⅳ. Comparative Analysis
     Ⅴ. Regression Analysis
     Ⅵ. Concluding Remarks
     APPENDIX
     REFERENCES
Equity across Generations and Uncertainty within a Generation: A Welfare Analysis of the National Pension System / Kyooho Kwon

This paper utilizes a life-cycle overlapping-generations model to quantify the welfare effects of plans to postpone the depletion of the National Pension Fund. In order for the model to incorporate the rapidly changing demographic structure of Korea fully, we build and calibrate a model in transition directly. The model is considered suitable for analyzing the effects of demographic changes on the Korean economy and the effects of plans to change the National Pension System. According to a simulation of the model, to postpone the depletion of the National Pension Fund for 30 years, the premium rate must be increased to 18.3% from the current rate of 9%. By postponing the depletion of the fund reserve, young and future generations gain significantly at the expense of the older generations. The simulation results should be, however, interpreted as meaning that the current system is unjustifiably partial to the older generations. Moreover, given the current premium rate, it is desirable to strengthen the income-redistribution function of the National Pension System.
※ This paper is a revised and translated version of Kwon (2016), Research Monograph 2016-11, Korea Development Institute.

Health Capacity to Work at Older Ages in South Korea: Estimates and Implications for Public Pension Policies / Dohyung Kim

Health capacity to work for the elderly is an essential piece of information for designing social policies in an aging society. Here, we assess the health capacity to work of older men in South Korea and provide a cross-country comparison. Following the methodology proposed by Milligan and Wise (2012), which uses the cohort mortality rate as a proxy for overall health status, we quantify the additional employment capacity of current older men in reference to the mortality-employment relationship of a generation ago. Despite the high employment rate of older men in South Korea, we find substantial additional employment capacity among older men (those aged 55 or more) as of 2016 comparable in size to those found in other advanced countries. We also find evidence that older men are not merely capable of working but are also willing to work, and many of them are increasingly combining pension income and work. These findings suggest that labor supply disincentives for older men embedded in public pension systems in South Korea need to be thoroughly reexamined and adjusted accordingly lest they should inhibit the labor supply of older workers.

Sales Compensation and Recommendations as the Fund of the Month / Yoonhae Oh

This study analyzes whether mutual fund distributors are more likely to recommend products with higher sales compensation to maximize their profit. The lists of the ‘fund of the month’ on their webpages are utilized from April of 2015 to August of 2015. A simple comparative analysis shows that the average sales fees and the average front-end load are significantly higher in the recommended funds among the A share class of domestic equity funds. The results of a regression analysis confirm that funds with high sales compensation levels are more likely to be recommended. This holds true for both domestic equity funds and hybrid bond funds even after controlling for fund age, fund size, and past returns.
※ This paper is a revised and translated version of the chapter 3 of Oh (2015), Research Monograph 2015-06, Korea Development Institute.
Article list
  • Read more

    This paper utilizes a life-cycle overlapping-generations model to quantify the welfare effects of plans to postpone the depletion of the National Pension Fund. In order for the model to incorporate the rapidly changing demographic structure of Korea fully, we build and calibrate a model in transition directly. The model is considered suitable for analyzing the effects of demographic changes on the Korean economy and the effects of plans to change the National Pension System. According to a simulation of the model, to postpone the depletion of the National Pension Fund for 30 years, the premium rate must be increased to 18.3% from the current rate of 9%. By postponing the depletion of the fund reserve, young and future generations gain significantly at the expense of the older generations. The simulation results should be, however, interpreted as meaning that the current system is unjustifiably partial to the older generations. Moreover, given the current premium rate, it is desirable to strengthen the income-redistribution function of the National Pension System.

  • Read more

    Health capacity to work for the elderly is an essential piece of information for designing social policies in an aging society. Here, we assess the health capacity to work of older men in South Korea and provide a cross-country comparison. Following the methodology proposed by Milligan and Wise (2012), which uses the cohort mortality rate as a proxy for overall health status, we quantify the additional employment capacity of current older men in reference to the mortality-employment relationship of a generation ago. Despite the high employment rate of older men in South Korea, we find substantial additional employment capacity among older men (those aged 55 or more) as of 2016 comparable in size to those found in other advanced countries. We also find evidence that older men are not merely capable of working but are also willing to work, and many of them are increasingly combining pension income and work. These findings suggest that labor supply disincentives for older men embedded in public pension systems in South Korea need to be thoroughly reexamined and adjusted accordingly lest they should inhibit the labor supply of older workers.

  • Read more

    This study analyzes whether mutual fund distributors are more likely to recommend products with higher sales compensation to maximize their profit. The lists of the ‘fund of the month’ on their webpages are utilized from April of 2015 to August of 2015. A simple comparative analysis shows that the average sales fees and the average front-end load are significantly higher in the recommended funds among the A share class of domestic equity funds. The results of a regression analysis confirm that funds with high sales compensation levels are more likely to be recommended. This holds true for both domestic equity funds and hybrid bond funds even after controlling for fund age, fund size, and past returns.

 
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