Recent articles have reported a large and growing financial crisis associated with retiree health plans offered by state and local governments, and have expressed alarm over their impact on the financial status of these governmental units (Goldman Sachs 2007; David Zion and Amit Varshney 2007). The concern about the unfunded liabilities of retiree health plans follows from a change in the public accounting rules issued by the Governmental Accounting Standards Board (GASB). GASB Statement No. 45 requires state and local governments to report unfunded accrued liabilities and annual required contributions needed to fully fund the retiree health promises. The GASB 45 statements produced by state governments indicate that unfunded liabilities for state employees and retirees total approximately $500 billion. This does not include additional liabilities associated with retiree health plans for local governments and public school teachers with plans that are not managed at the state level. The explicit acknowledgement of these liabilities and their absolute and relative size has created considerable concern and debate among economists, policymakers, and voters. This article presents data from state actuarial reports on the size of retiree health liabilities, examines the key assumptions used to determine the unfunded liabilities, and then assesses the potential future of retiree health plans in the public sector.

Reforming Social Security to restore its financial balance is one of the most important public policy issues of the 21st century. Reform is essential whether one favors maintaining the basic structure of the current system or transforming this retirement program to include individual accounts. The needed national debate on Social Security must be based on the best, unbiased measures of the financial status of the program and on appropriate economic research. Unfortunately, projections, data, and research are often misused in reform debates. Even some “experts” are often uninformed about various aspects of the current and future financial status of Social Security. This paper highlights misconceptions and focuses on the facts of Social Security financing.

The relationship between job tenure and annual earnings in Japan has received considerable attention from social scientists examining employment contracts and the Japanese compensation system. In their widely cited article, Masanori Hashimoto and John Raisian (1985), using data for 1980, showed that Japanese men have greater job tenure than comparable workers in the United States and that the earnings of Japanese men rise more rapidly with increased tenure. They found that an additional year of tenure increases earnings in both small and large firms in Japan more than does an additional year of general market experience. Their results for the United States indicate that general market experience increases earnings more than an additional year of job tenure. The 1970's and 1980's were a period of substantial change in Japanese labor markets, due to the rapid aging of the population and the restructuring of the economy following the oil crisis. The present analysis extends the work of Hashimoto and Raisian by estimating earnings equations for Japanese men for the years 1971, 1976, 1981, and 1986. Specifically, we wish to investigate whether Hashimoto and Raisian's findings have been stable over time or whether changes in the labor market have altered the importance of tenure relative to total labor-market experience in the Japanese labor market. I. Changes in the Labor Market

Numerous recently uncovered cartels operated along the supply chain, with firms at one end facilitating collusion at the other—hub-and-spoke arrangements. These cartels are hard to rationalize because they induce double marginalization and higher costs. We examine Canada’s alleged bread cartel and provide the first comprehensive analysis of hub-and-spoke collusion. Using court documents and pricing data, we make three contributions: (i) we show that collusion was effective, increasing inflation by about 50 percent; (ii) we provide evidence that collusion existed at both ends of the supply chain; and (iii) we develop a model explaining why this form of collusion arose.

Geographic dispersion of depositors, borrowers, and banks may prevent funding from flowing to high-loan-demand areas, limiting credit access. Using bank-county-year-level data, we provide evidence of geographic imbalance of deposits and loans and develop a methodology for investigating the contribution to this imbalance of branch networks, market power, and scope economies. Results are based on a novel measure of imbalance and estimation of a structural model of bank competition that admits interconnections across locations and between deposit and loan markets. Counterfactual experiments show branch networks, scope economies, and local competition affect credit flow to disadvantaged markets.

We examine the relationship between concentration and price dispersion using variation induced by a merger in the Canadian mortgage market. Since interest rates are determined through a search and negotiation process, consolidation weakens consumers' bargaining positions. We use reduced-form techniques to estimate the mergers' distributional impact, and show that competition benefits only consumers at the bottom and middle of the transaction price distribution, and that mergers reduce the dispersion of prices. We illustrate that these effects can be explained by the presence of search frictions, and that the average effect of mergers on rates underestimates the increase in market power.

Workers plan and save for retirement throughout their careers. Individuals must navigate complex financial instruments and understand public and employer-provided retirement plan characteristics. Beginning when a worker is first hired, most employers provide the option to contribute to retirement saving plans. As workers near retirement, they face many choices that have considerable consequences for their retirement income security. At these two important periods, employers can provide timely information assisting workers in making choices that optimize lifetime wellbeing. Our research, conducted in cooperation with several large employers, illustrates the importance of employer-provided education in increasing worker understanding of several retirement-related issues.