Assessing Policies for Retirement Income Needs for Data, Research, and Models (1997) / Chapter Skim
Currently Skimming:
Appendix D: Major Aspects of DYNASIM2 and PRISM
Appendix D: Major Aspects of DYNASIM2 and PRISM
Pages 199-212
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 199... ...
: they simulate not only Social Security taxes and benefits, but also employer pension and Individual Retirement Account (IRA) contributions and benefits, Supplemental Security Income (SSI)
|
From page 200... ...
and comments on key limitations involving their ability to simulate behavioral responses to policy changes and to simulate the effects on workers and retirees of employer benefit and labor demand decisions (drawing on Burtless, 1989; Ross, 1991; and a review of the pension simulation components of the two models by panel member Olivia Mitchell)
|
From page 201... ...
Table D-1 lists the events included in the simulation of longitudinal histories and the events that are simulated using the synthetic histories for the two models. Tables D-2 and D-3 provide additional information on the determinants of major events simulated by DYNASIM2 and PRISM, respectively.
|
From page 202... ...
202 ASSESSING POLICIES FOR RETIREMENT INCOME TABLE D-1 Basic Features of DYNASIM2 and PRISM Feature DYNASIM2 PRISM Input Data Simulation Base Year 1972 Information in Simulation Database Exact match of March 1973 CPS and Social Security Exact match of March 1978 CPS and Social Security earnings records earnings records; also matched with March and May 1979 CPS Retirement Plan Provisions databases 1979 Demographic 1973 1978- 1979 Income 1972 1977- 1978 Employment 1972- 1973 1977- 1979 Quarters of Social Security Coverage 1937- 1972 1937- 1977 Social Security Taxable Earnings 1951 - 1972 1951 - 1977 Pension Characteristics 1979 Events Simulated to Create Longitudinal Histories Demographic Death Death Birth Birth Marriage Marriage Divorce Divorce Disability Disability Education level Education level Leaving home Migration Labor Force Participation Annual hours of work Annual hours of Hourly wage participation Hourly wage Whether unemployed Proportion of labor force hours unemployed Job and Pension Characteristics Job change Industry Pension coverage Pension plan assignment
|
From page 203... ...
Retirement Supplemental Security Income Taxes Job change Industry Pension coverage Plan participation Pension eligibility Type of plan Benefit formula Plan constants Benefit computation Retirement benefit eligibility Retirement benefit computation Disability benefit Spouse benefit Children's benefit Participation Accumulations Distribution Whether leave job Whether accept new job Eligibility Benefits Participation Federal income tax Social Security payroll tax Pension acceptance Social Security acceptance Adoption Contributions Benefit computation Retirement benefit eligibility Retirement benefit computation Disability benefit Spouse benefit Children's benefit Distribution Eligibility Benefits Participation Federal income tax Social Security payroll tax State income tax aDeveloped by the original contractor for PRISM, ICE Incorporated. NOTE: Table does not include the PRISM Long-Term Care Financing Model.
|
From page 204... ...
204 ASSESSING POLICIES FOR RETIREMENT INCOME TABLE D-2 Determinants of Major Events Simulated by DYNASIM2 Event or Characteristic Variables Used to Determine Event Simulation of Longitudinal Histories Demographic Event Death Married Women 45-64 All Others Birth Multiple Birth Sex of Newborn Marriage Age 18-29 Other Ages or Ever Married Mate Matching Leaving Homea Divorce Education Mobility Disability Onset Recovery Labor Force Events Labor Force Participation Hours in the Labor Force Age, race, sex, marital status, education, number of children Age, race, sex, marital status, education Age, marital status, number of children, race, education Race Race Age, race, sex, previous marital status, income, education, region, weeks worked, hourly wage, asset income, welfare, unemployment compensation Age, race, sex, previous marital status Difference in age, difference in education Age, race, sex Distribution over time of expected divorces for this marriage cohort, age at marriage, education, previous marital status, presence of young children, weeks worked, wages Race, sex, age, years at current school level, parents' education Number of years married, size of family, age and sex of head, education of head, race, region, size of metropolitan statistical area (MSA) Age, race, sex, marital status Age, race, sex, marital status, education Age, race, sex, education, South, disability, marital status, student, children, spouse earnings Age, transfer income, expected wage, disability, marital status, children
|
From page 205... ...
MAJOR ASPECTS OF DYNASIM2 AND PRISM TABLE D-2 Continued 205 Event or Characteristic Variables Used to Determine Event Wage Rate Unemployment Job Characteristics and Pension Plans Job Change Industry of New Job Pension Coverage on New Job Pension Plan Participation Type of Pension Coverage Pension Eligibility and Benefits Retirement Eligibility Vesting Benefit Formula Benefit Plan Constants Individual Retirement Accounts Plan Participation Retirementb Probability of Leaving Job Probability of Taking New Job Race, sex, age, South, disability, marital status, education, student Age, sex, race, education, marital status, South, disability, children Simulation of Jobs, Pensions, and Retirement, Using Longitudinal Histories Age, sex, tenure on current job, industry Sex, education, previous industry Sex, industry, earnings level Age, tenure on job, full- or parttime status, sex Industry Age, industry, years of service, type of pension Industry Industry and type of pension coverage Benefit formula, industry, type of pension coverage Sex, earnings Age, sex, disability, marital status, pension eligibility and amounts, Social Security eligibility and amounts, wage, earnings Age, disability, marital status, pension eligibility and amounts, Social Security eligibility and amounts, imputed wage aLeaving home for reasons other than marriage, birth of a child, divorce, or death. bThe retirement module's choice of retirement age for an individual overrides whatever pattern of labor force participation may have been modeled earlier in the simulation of the individual's longitudinal history.
|
From page 206... ...
Age, family earnings, pension coverage Sex, marital status, family earnings SOURCE: Ross (l991:Table 3)
|
From page 207... ...
This module is used whenever a termination benefit must be computed for a covered vested worker or when a worker is simulated to retire in order to evaluate retirement benefits. The kernel of the Employer Pension Module is that it determines the parameters of each worker's pension plan, including the early, normal, and special early retirement ages, probability of full vesting after 10 years of service, defined benefit formula type, and specified constant terms within the defined benefit formula.
|
From page 208... ...
Benefit formulas for defined benefit plan participants are assigned annual contribution rates of 7 percent and a nominal rate of interest on their account balances of 7 percent. There are some arbitrary assumptions in the Employer Pension Module.
|
From page 209... ...
Pension coverage is determined in the labor force module. Pension plan coverage is allocated on the basis of 1979 and 1983 CPS coverage rates, assigned as a function of industry, age, wage, and full- or part-time status.
|
From page 210... ...
Most pension parameters in the model are taken as fixed numbers, rather than being developed endogenously. Thus, industry pension coverage rates are constraints, and pension plan provisions are assumed not to change over time.
|
From page 211... ...
Also, many pension-related assumptions in both models allow little or no variation over time or across workers: for example, assuming fixed contribution rates for defined benefit plans, that employees always contribute the maximum to defined contribution plans, or that workers receive all of the benefits from defined benefit plans from all prior jobs that the model's pension rules say they are entitled to when they retire. A reason that neither model has been revised to update key transition probabilities or to incorporate more appropriate functional forms that reflect newer understanding of behavior has to do with the cost and time constraints imposed by their mainframe-oriented design.
|
From page 212... ...
As noted above, events or characteristics that are simulated after the creation of the longitudinal histories are affected by those histories but cannot in turn affect the sequence of demographic and labor force events. For example, in both models, changes in the Social Security system cannot lead to compensating changes in labor supply over an individual's work life unless the longitudinal histories are re-created with a new set of labor supply equations incorporating the expected response.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.