What Drives Pension Reform Measures in the OECD? Evidence based on a New Comprehensive Dataset and Theory

Using a unique narratively‐constructed dataset of pension reform measures of the OECD countries since the 1970s, we explore the determinants of those measures based on information available when they are legislated. We distinguish expansionary, contractionary and combined reform regimes. No regime’s likelihood is affected by current or projected demographic changes. By
contrast, business cycle indicators play a substantially larger role: a worsening makes contractionary and combination regimes more likely and expansionary regimes less likely. A simple theoretical model with an adjustment cost of changing the pension arrangement can account for reform responsiveness to the business cycle and non‐responsiveness to demography.