financial market ; information ; economic models ; pricing

Without implicating them for any of the contents of the paper, I am grateful to the following for helpful discussions or comments: Andrea Beller (University of Illinois), David Bloom (Harvard and Columnbia), Glen Cain (University of Wisconsin), Ron Ehrenberg (Cornell), Victor Fuchs (Stanford), Bob Gregory (Australian National University), Jonathan Leonard (University of California, Berkeley), Roberta Robb (Brock University), and Paul Weiler (Harvard). Financial support of the Humanities and Social Sciences Committee of the Research Board of the Universitu of Toronto is eratefullu acknowlede,ed

This paper develops the view that employer-sponsored pension plans are best understood as retirement income insurance for employees and from that perspective addresses a number of questions regarding the reasons for their existence, their design, and their funding and investment policies. The most important of these questions are: - Why do employers provide pension plans for their employees and why is participation usually mandatory? - Why is the defined benefit form of pension plan the dominant one rather than defined contribution? - Why are the payout options under most plans limited to life annuities? - Why are most plans integrated with Social Security? - Why don't corporate pension plans follow the extreme funding and asset allocation policies that seem to be optimal from the perspective of shareholder wealth maximization? - Why do employers often make ad hoc increases in pension benefits not strictly required under the formula in defined benefit plans? - Why don't private pensions offer inflation insurance

on the theory of state and local public finance is the seminal paper by Charles Tiebout (1956). Tiebout constructed a multijurisdictional model in which independent local governments offer a wide variety of expenditure and tax policies, and perfectly mobile consumers reveal their preferences for local public goods through their choice of residential community. He argued that, under such circumstances, local public service provision would be efficient. The Tiebout model has formed the basis of a vast number of subsequent articles in the state and local public finance literature and has also been very influential in urban and regional economics. The efficiency properties of various Tiebout-type models of local public good provision have been examined, and the role of politics in these models has been debated at length in this literature. Of more direct relevance to this paper, however, is the fact that although Tiebout had little to say directly about taxation (simply assuming the existence of head taxes), subsequent analyses have used adaptations of this model to examine the effects of local head taxes, land taxes, and property taxes. It is the literature on the efficiency and distributional effects of alternative local taxes that is the subject of this survey. 1