Topics in public finance: social security and taxation

Summary The field of public finance focuses on the spending and taxing activities of governments and their influence on the allocation of resources and distribution of income. This work covers in three parts different topics related to public finance which are currently widely discussed in media and politics. The first two parts deal with issues on social security, which is in general one of the biggest spending shares of governments. The third part looks at the main income source of governments by analyzing the perceived value of tax competition. Part one deals with the current problem of increased early retirement by focusing on Switzerland as a special case. Early retirement is predominantly considered to be the result of incentives set by social security and the tax system. But the Swiss example demonstrates that the incidence of early retirement has dramatically increased even in the absence of institutional changes. We argue that the wealth effect also plays an important role in the retirement decision for middle and high income earners. An actuarially fair, but mandatory funded system with a relatively high replacement rate may thus contribute to a low labor market participation rate of elderly workers. We provide evidence using a unique dataset on individual retirement decisions in Swiss pension funds, allowing us to perfectly control for pension scheme details. Our findings suggest that affordability is a key determinant in the retirement decisions. The higher the accumulated pension capital, the earlier men, and to a smaller extent women, tend to leave the workforce. The fact that early retirement has become much more prevalent in the last 15 years is a further indicator of the importance of a wealth effect, as the maturing of the Swiss mandatory funded pension system over that period has led to an increase in the effective replacement rates for middle and high income earners. Part two covers the theoretical side of social security. Theories analyzing optimal social security benefits provide important qualitative results, by mainly using one general type of an economy. Economies are however very diverse concerning numerous aspects, one of the most important being the wealth level. This can lead to significant quantitative benefit differences that imply differences in replacement rates and levels of labor supply. We focus on several aspects related to this fact. In a within cohort social security model, we introduce disability insurance with an imperfect screening mechanism. We then vary the wealth level of the model economy and analyze how the optimal social security benefit structure or equivalently, the optimal replacement rates, changes depending on the wealth level of the economy, and if the introduction of disability insurance into a social security system is preferable for all economies. Second, the screening mechanism of disability insurance and the threshold level at which people are defined as disabled can differ. For economies with different wealth levels, we determine for different thresholds the screening level that maximizes social welfare. Finally, part three turns to the income of governments, by adding an element to the controversy on tax competition versus tax harmonization.2 Inter-jurisdictional tax competition can generate at least two potential benefits or costs: On a public level, tax competition may result in a lower or higher efficiency in the production of public services. But there is also a more private benefit in the form of an option for individuals to move to a community with a lower tax rate in the future. To explore the value citizens attach to tax competition we analyze a unique popular vote for a complete tax harmonization between communities in the third largest Swiss canton, Vaud. Although a majority of voters would have seemingly benefited from replacing the current tax rate by a revenue-neutral average tax rate, the proposal was rejected by a large margin. Our estimates suggest that the estimated combined perceived benefit from tax competition is in the range of 10%.

Capacité de travail en cas d'affections pulmonaires

This short review begins by defining some basic medico-legal concepts such as "impairment" and "disability" and gives the corresponding terms in French and German. It is then shown how, in stable obstructive and restrictive respiratory diseases such as COPD and lung fibrosis, the degree of impairment can be assessed on the basis of FEV1 and indices of gas exchange. In the case of bronchial asthma, however, with its typically variable degree of airflow limitation, the amount of reversibility and treatment necessary to achieve optimum bronchodilatation must be taken into account. This can best be done using a score system. Impairment represents a base but in no way equals the final percentage of disability pension or compensation, which are always assessed by the competent administrative authority. However, it is the physician who specifies the amount and type of work an individual patient, with his or her particular degree of disability, can or cannot be expected to do.

The future of longevity: background and perspectives

In many developed countries, including Switzerland, the ongoing increase in life expectancy is driven by the mortality decline among older persons. This has important consequences for both the provision of health care and the management of pension funds. In this context, the Swiss Federal Office of Statistics mandated a small group of experts to provide a critical review on the future evolution of mortality in developed countries. The report starts with an analysis of the past trends in life expectancy. Longevity is defined here as the duration (or the length) of life as observed in population or in individuals. The oldest and still most used indicators of longevity are life expectancy at birth (LE0) at a population level, and maximum life span (MLS) at the individual level (page 9) and in healthy life expectancy (page 19). A discussion on the future evolution of mortality and health is then presented (page 27). A set of recommendations is finally proposed (page 39).

Essays on the treatment of cash flows under stochastic interest rates

Abstract This paper shows how to calculate recursively the moments of the accumulated and discounted value of cash flows when the instantaneous rates of return follow a conditional ARMA process with normally distributed innovations. We investigate various moment based approaches to approximate the distribution of the accumulated value of cash flows and we assess their performance through stochastic Monte-Carlo simulations. We discuss the potential use in insurance and especially in the context of Asset-Liability Management of pension funds.

Monnaie, citoyenneté et globalisation financière. Les citoyens entre protection sociale et promesses de la capitalisation boursière

La monnaie a été étudiée par des économistes hétérodoxes, des sociologues et des historiens qui ont souligné ses rapports à l'ordre collectif, mais elle n'est que rarement analysée sous l'angle de la citoyenneté. Notre thèse propose une réflexion théorique sur quatre types de fonctions (politique, symbolique, socioéconomique et psychoaffective) qui permettent à la monnaie de jouer un rôle de médiation de la citoyenneté. A partir d'une perspective qui combine les apports de l'économie politique internationale et de l'école de la régulation, nous montrons que cette médiation ne mobilise pas seulement des mécanismes sociopolitiques nationaux, mais aussi des mécanismes internationaux qui rétroagissent sur la sphère domestique des États et affectent leur capacité à définir leur régime de citoyenneté. Cette relation est analysée dans le contexte de l'institutionnalisation du système monétaire international de Bretton Woods (1944) et du développement de la globalisation financière depuis les années 1970. Si la monnaie a été mise au service d'un principe de protection des droits sociaux des citoyens contre les pressions financières extérieures après la Seconde guerre mondiale, elle contribue aujourd'hui à l'ouverture de la sphère domestique des Etats aux flux de capitaux transnationaux et à la création d'un ordre politique et juridique favorable aux droits des investisseurs. Cette dynamique est impulsée par l'essor de nouveaux intermédiaires financiers (notamment les agences de notation et les investisseurs institutionnels) et l'émergence concomitante d'une nouvelle forme d'Etat légitimée à partir d'un discours politique néolibéral insistant sur la quête de compétitivité, la réduction de la protection sociale et la responsabilisation individuelle. Elle se traduit par la privatisation des régimes de retraite et le développement des politiques d'éducation financière qui incitent les citoyens à se comporter en « preneurs de risques » actifs et responsables, assurant eux-mêmes leur sécurité économique à travers le placement de leur épargne retraite sur les marchés financiers. Nous soulignons toutefois les difficultés institutionnelles, cognitives et socioéconomiques qui rendent cette transformation de la citoyenneté contradictoire et problématique. Money has been studied by heterodox economists, sociologists and historians who stressed its relationship to collective order. However, it has hardly been analysed from the viewpoint of its relationship to citizenship. We propose a theoretical account of four types of functions (political, symbolic, socioeconomic and psychoaffective) enabling money to operate as a mediation of citizenship. From a perspective that combines the contributions of international political economy and the regulation school, we show that this mediation mobilises not only national sociopolitical mechanisms, but also international mechanisms which feed back on the domestic sphere of states and affect their capacity to define their regime of citizenship. This relationship is analysed in the context of the institutionalisation of the international monetary system of Bretton Woods (1944) and the development of financial globalization since the 1970s. If money has served to protect the social rights of citizens against external financial pressures after the Second World War, today it contributes to the opening of the domestic sphere of states to transnational capital flows and to the creation of a political and legal order favorable to the rights of investors. This dynamic is driven by the rise of new financial intermediaries (in particular rating agencies and institutional investisors) and the simultaneous emergence of a new form of state legitimized from a neoliberal political discourse emphasizing the quest for competitiveness, reduced social protection and individual responsibilization. It results in the privatization of pension systems and the development of policies of financial education that encourage citizens to behave as active and responsible « risk takers », ensuring their own economic security through the investment of their savings retirement on financial markets. However, we emphasize the institutional, cognitive and socioeconomic difficulties that make this transformation of citizenship contradictory and problematic. - Money has been studied by heterodox economists, sociologists and historians who stressed its relationship to collective order. However, it has hardly been analysed from the viewpoint of its relationship to citizenship. We propose a theoretical account of four types of functions (political, symbolic, socioeconomic and psychoaffective) enabling money to operate as a mediation of citizenship. From a perspective that combines the contributions of international political economy and the regulation school, we show that this mediation mobilises not only national sociopolitical mechanisms, but also international mechanisms which feed back on the domestic sphere of states and affect their capacity to define their regime of citizenship. This relationship is analysed in the context of the institutionalisation of the international monetary system of Bretton Woods (1944) and the development of financial globalization since the 1970s. If money has served to protect the social rights of citizens against external financial pressures after the Second World War, today it contributes to the opening of the domestic sphere of states to transnational capital flows and to the creation of a political and legal order favorable to the rights of investors. This dynamic is driven by the rise of new financial intermediaries (in particular rating agencies and institutional investisors) and the simultaneous emergence of a new form of state legitimized from a neoliberal political discourse emphasizing the quest for competitiveness, reduced social protection and individual responsibilization. It results in the privatization of pension systems and the development of policies of financial education that encourage citizens to behave as active and responsible « risk takers », ensuring their own economic security through the investment of their savings retirement on financial markets. However, we emphasize the institutional, cognitive and socioeconomic difficulties that make this transformation of citizenship problematic.

Les stratégies politiques et foncières des grands propriétaires fonciers au niveau national : étude comparée

Ce cahier résume les résultats d'analyses des stratégies politiques et foncières des grands propriétaires fonciers suisses et les compare au niveau national. Les grands propriétaires fonciers sont les cantons et les communes, les bourgeoisies, les Chemins de fer fédéraux, Armasuisse, Pro Natura, les caisses de pension, les sociétés immobilières, fonds et fondations de placement, les entreprises de commerce de détail ainsi que les banques et assurances. Les principaux enseignements tirés de la comparaison des stratégies politiques et foncières de ces propriétaires concernent la transformation des rapports à la propriété, se manifestant, entre autres, dans une financiarisation du secteur foncier et immobilier, une « titrisation », une fragmentation de la propriété, une montée en puissance des acteurs intermédiaires, un allongement de la chaîne décisionnelle, une anonymisation de la propriété, une dilution des responsabilités ainsi qu'une montée en puissance des ratings. Die vorliegende Publikation enthält die Zusammenfassung von Analysen der Strategien ausgewähltter grosser Grundeigentümer unter den Gesichtswinkel ihrer Verhaltensweisen als eigentümer und ihrer politischen Strategien auf der Ebene der Raumplanung. Diese Strategien werden auf gesamtschweizerischer Ebene miteinander verglichen. Die einbezogenen Grundeigentümer sind die Kantone und Gemeinden, die Burgergemeinden, die Schweizerischen Bundesbahnen, Armasuisse, ProNatura, die Pensionskassen, die Immobiliengesellschaften, Immobilienfonds und Immobilienstiftungen, Detailhandelsunternehmungen sowie Banken und Versicherungen. Die hauptsächlichsten Ergebnisse der vergleichenden Analyse betreffen die veränderten Organisationsstrukturen und die Transformation der Strategien der Akteure bezüglich der Ausübung ihrer Eigentumsrechte und ihrer Interventionen auf der Ebene der staatlichen Raum planung. Diese finden ihren Ausdruck insbesondere in Gestalt einer zunehmenden Finanzialisierung des Immobiliensektors, einer ,,Titrisierung", einer Fragmentierung, einer zunehmenden Bedeutungintermediärer Akteure oder einer Verlängerung der Entscheidungsketten. Feststellen lässtsich ebenfalls eine Anonymisierung des Grundeigentums, eine zunehmende Verwischung der Verantwortlichkeiten und ein beachtlicher Bedeutungsgewinn des ratings.

Predictors of physiotherapy and occupational therapy use two years after a vocational rehabilitation for orthopaedic trauma

Introduction.- Health care utilization is an important field of our economy. Nevertheless a minority of cases induce the majority of costs. For instance, in the setting of accident insurance, the most expensive 5% of all injured cases involve 80% of the health care costs. Although physiotherapy and occupational therapy consist of only a small proportion of these costs, it is nevertheless important to evaluate the factors that predict its use in order to improve services (i.e. allocation of resources to those who need them and benefit most).Patients and methods.- In this longitudinal prospective study, the cohort consisted of 2156 consecutively included patients with orthopaedic problems attending the clinique Romande de réadaptation (CRR) at Sion for inpatient rehabilitation after a work, traffic or leisure related injury. Two years after discharge, a questionnaire regarding the use of different health cares was send to the patients (1502 patients returned their questionnaires). The aim of this study was to calculate, with a logistic multivariate model, in-patient hospitalized for orthopaedic problems, the variables that mostly predict physiotherapy use 2 years after discharge.Results.- The full multivariate model contains 46 predictors. The use of physiotherapy and occupational therapy was significantly predicted in this multivariate model by the following predictors: Patients with a spinal problem (OR 1.51 versus lower-extremity problem, 95% CI 1.01 to 2.27), a disability pension (OR 1.69, 95% CI 1.09 to 2.60), patients with sports activities (OR 1.56, 95% CI 1.26 to 1.94), patients with longer stay at the rehabilitation clinic (OR 1.22 per week, 95% CI 1.05 to 1.41), women (OR 1.64, 95% CI 1.09 to 2.48) and those consulting a psychiatrist (OR 1.66, 95% CI 1.06 to 2.60).Discussion.- In this prospective study with a 2-year follow-up, different factors predicted the use of physiotherapy and occupational therapy after an injury. Further studies are needed to clarify the impact of these factors for the health care utilization and the strategies, which would allow to improve allocation of available resources.

On optimal dividend strategies with deficit or incomplete information

Rapport de synthèse Cette thèse consiste en trois essais sur les stratégies optimales de dividendes. Chaque essai correspond à un chapitre. Les deux premiers essais ont été écrits en collaboration avec les Professeurs Hans Ulrich Gerber et Elias S. W. Shiu et ils ont été publiés; voir Gerber et al. (2006b) ainsi que Gerber et al. (2008). Le troisième essai a été écrit en collaboration avec le Professeur Hans Ulrich Gerber. Le problème des stratégies optimales de dividendes remonte à de Finetti (1957). Il se pose comme suit: considérant le surplus d'une société, déterminer la stratégie optimale de distribution des dividendes. Le critère utilisé consiste à maximiser la somme des dividendes escomptés versés aux actionnaires jusqu'à la ruine2 de la société. Depuis de Finetti (1957), le problème a pris plusieurs formes et a été résolu pour différents modèles. Dans le modèle classique de théorie de la ruine, le problème a été résolu par Gerber (1969) et plus récemment, en utilisant une autre approche, par Azcue and Muler (2005) ou Schmidli (2008). Dans le modèle classique, il y a un flux continu et constant d'entrées d'argent. Quant aux sorties d'argent, elles sont aléatoires. Elles suivent un processus à sauts, à savoir un processus de Poisson composé. Un exemple qui correspond bien à un tel modèle est la valeur du surplus d'une compagnie d'assurance pour lequel les entrées et les sorties sont respectivement les primes et les sinistres. Le premier graphique de la Figure 1 en illustre un exemple. Dans cette thèse, seules les stratégies de barrière sont considérées, c'est-à-dire quand le surplus dépasse le niveau b de la barrière, l'excédent est distribué aux actionnaires comme dividendes. Le deuxième graphique de la Figure 1 montre le même exemple du surplus quand une barrière de niveau b est introduite, et le troisième graphique de cette figure montre, quand à lui, les dividendes cumulés. Chapitre l: "Maximizing dividends without bankruptcy" Dans ce premier essai, les barrières optimales sont calculées pour différentes distributions du montant des sinistres selon deux critères: I) La barrière optimale est calculée en utilisant le critère usuel qui consiste à maximiser l'espérance des dividendes escomptés jusqu'à la ruine. II) La barrière optimale est calculée en utilisant le second critère qui consiste, quant à lui, à maximiser l'espérance de la différence entre les dividendes escomptés jusqu'à la ruine et le déficit au moment de la ruine. Cet essai est inspiré par Dickson and Waters (2004), dont l'idée est de faire supporter aux actionnaires le déficit au moment de la ruine. Ceci est d'autant plus vrai dans le cas d'une compagnie d'assurance dont la ruine doit être évitée. Dans l'exemple de la Figure 1, le déficit au moment de la ruine est noté R. Des exemples numériques nous permettent de comparer le niveau des barrières optimales dans les situations I et II. Cette idée, d'ajouter une pénalité au moment de la ruine, a été généralisée dans Gerber et al. (2006a). Chapitre 2: "Methods for estimating the optimal dividend barrier and the probability of ruin" Dans ce second essai, du fait qu'en pratique on n'a jamais toute l'information nécessaire sur la distribution du montant des sinistres, on suppose que seuls les premiers moments de cette fonction sont connus. Cet essai développe et examine des méthodes qui permettent d'approximer, dans cette situation, le niveau de la barrière optimale, selon le critère usuel (cas I ci-dessus). Les approximations "de Vylder" et "diffusion" sont expliquées et examinées: Certaines de ces approximations utilisent deux, trois ou quatre des premiers moments. Des exemples numériques nous permettent de comparer les approximations du niveau de la barrière optimale, non seulement avec les valeurs exactes mais également entre elles. Chapitre 3: "Optimal dividends with incomplete information" Dans ce troisième et dernier essai, on s'intéresse à nouveau aux méthodes d'approximation du niveau de la barrière optimale quand seuls les premiers moments de la distribution du montant des sauts sont connus. Cette fois, on considère le modèle dual. Comme pour le modèle classique, dans un sens il y a un flux continu et dans l'autre un processus à sauts. A l'inverse du modèle classique, les gains suivent un processus de Poisson composé et les pertes sont constantes et continues; voir la Figure 2. Un tel modèle conviendrait pour une caisse de pension ou une société qui se spécialise dans les découvertes ou inventions. Ainsi, tant les approximations "de Vylder" et "diffusion" que les nouvelles approximations "gamma" et "gamma process" sont expliquées et analysées. Ces nouvelles approximations semblent donner de meilleurs résultats dans certains cas.

Late careers and the transition to retirement in Switzerland

A substantial body of life-course research has considered occupational trajectories in Switzerland focusing either on early or middle adulthood careers. However, the issue of the last working period and the retirement transition is receiving increasing attention for several reasons: the permanence of low birth rates associated with an ageing population, a high proportion of active old workers, continuous changes in the timing of retirements, and active ageing policies aiming at keeping people working after the state pension age. Moving forward on this topic, the present doctoral thesis aimed to offer new insights on the dynamics of the final career phase and the transition to retirement in Switzerland through a life-course approach. Concerning the main results, this thesis provides consistent evidences on the great influence of longterm familial and employment trajectories as well as individual positional factors on (i) the vulnerability during the last working period, (ii) the timing of retirement, (iii) the voluntariness of late retirement, and (iv) the financial well-being of retirees. In this way, this thesis offers significant contributions to the life-course, gender, and social policy research focused on ageing processes. -- Un ensemble considérable de recherches sur les parcours de vie a examiné les trajectoires professionnelles en Suisse, en mettant l'accent sur la carrière professionnelle des jeunes et, plus tard, à l'âge adulte. Toutefois, l'étude de la fin de la carrière professionnelle (c'est-à-dire de 50 ans jusqu'à la retraite) reçoit une attention croissante pour plusieurs raisons: la persistance du faible taux de natalité associé à une population vieillissante, la forte proportion de travailleurs âgés actifs, des évolutions continues dans le moment du départ à la retraite, et des politiques visant à maintenir les personnes âgées au travail après l'âge légal de la retraite. Pour aller de l'avant sur ce sujet, la présente thèse de doctorat vise à offrir de nouvelles perspectives sur la fin de carrière et la transition à la retraite en Suisse, en mobilisant les outils de la sociologie des parcours de vie. En ce qui concerne les principaux résultats, cette thèse fournit des preuves cohérentes sur la grande influence des trajectoires professionnelles et familiales ainsi que des facteurs positionnels sur (i) la vulnérabilité au cours de la période de travail avant la retraite, (ii) le moment de départ à la retraite, (iii) le caractère volontaire de la retraite tardive, et (iv) le bien-être financier des retraités. Ainsi, cette thèse fournit d'importantes contributions à la recherche sur les parcours de vie, sur les étu es genre, et sur les politiques sociales, focalisées sur le processus de vieillissement.

The forced adoption of a fast-track appraisal process for a breast cancer treatment in UK

Trastuzumab (Herceptin ®, Roche) is approved in UK for the treatment of the metastatic breast cancer since 2001. As of 2005, concomitantly with the publication of 3 studies that showed it produces a 50% reduction of the recurrence rates of breast cancer, trastuzumab started to be prescribed in the earlt adjuvant treatrnent of this disease. Und June 2006, trastuzumab did not have both: 1) regulatory approval and 2) NICE [National Institute for Health and Clinical Excellence] recommendation for the use in early stages of breast cancer. During the period until June 2006, the trastuzumab use in those patients was not reimbursed and because the cost of trastuzumab is equal with the yearly UK average income, most of patients could not self fund their treatrnent. Before the publication of the final NICE guidance, the new data of trastuzumab in early breast cancer raised enormous patient and professional interest and expectations. A great volume of public and professional pressure was generated to transcend a system by which Primary Care Trusts can reimburse a treatment only after a formal guidance was issued. This paper draw on a case study depicting and analyzing the process by which regulatory approval and NICE recommendations were achieved in a record time and how trastuzumab became a standard treatment on early adjuvant breast cancer. According to the data we gathered in this work we were witnessing one of the fastest processes of adoption of a health care technology since the creation of NICE, in 1999. This study addresses the following research question: How and why does the adoption pattern of trastuzumab differ from the rational decision-making model of the reimbursement process in UK? [Author, p. 4]