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  1. The political (in)stability of funded social security
    Author: Beetsma, Roel; Komada, Oliwia; Makarski, Krzysztof; Tyrowicz, Joanna
    Published: October 2021
    Publisher:  IZA - Institute of Labor Economics, Bonn, Germany

    We analyze the political stability of funded social security. Using a stylized theoretical framework we study the mechanisms behind governments capturing social security assets in order to lower current taxes. The results and the driving mechanisms... more

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    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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    DS 4
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    We analyze the political stability of funded social security. Using a stylized theoretical framework we study the mechanisms behind governments capturing social security assets in order to lower current taxes. The results and the driving mechanisms carry over to a fully-fledged and carefully calibrated overlapping generations model with an aging population. Funding is efficient in a Kaldor-Hicks sense. We demonstrate that, even though we can rationalize the actual introduction of a two-pillar defined-contribution scheme with funding through a majority vote, a new vote to curtail the funded pillar through asset capture or permanent diversion of contributions to the pay-as-you-go pillar always receives majority support. For those alive and thus allowed to vote, the temporary reduction in taxes outweighs the reduction in retirement benefits. This result is robust to substantial intra-cohort heterogeneity and other extensions, and only overturned with a sufficient degree of altruism. Our analysis rationalizes the experience of Central and Eastern European countries, who rolled back their funded pension pillars soon after setting them up.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/250426
    Series: Discussion paper series / IZA ; no. 14765
    Subjects: social security; funding; pay-as-you-go; asset capture; majority vote; welfare
    Scope: 1 Online-Ressource (circa 66 Seiten), Illustrationen
  2. Intergenerational redistribution in a pay-as-you-go pension system
    Author: Lundberg, Jacob
    Published: May 2, 2024
    Publisher:  Research Institute of Industrial Economics, Stockholm, Sweden

    This study provides a comprehensive analysis of the generational wealth transfer within Sweden's public pay-as-you-go pension system introduced in 1960. Using extensive administrative registers, the paper quantifies the contributions made and... more

    Access:
    Verlag (kostenfrei)
    Verlag (kostenfrei)

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 206
    Inter-library loan:
    No inter-library loan

     

    This study provides a comprehensive analysis of the generational wealth transfer within Sweden's public pay-as-you-go pension system introduced in 1960. Using extensive administrative registers, the paper quantifies the contributions made and benefits received by each birth cohort. The findings reveal a substantial fiscal imbalance favouring the initial generation (born in the early 20th century), who received a net gain of $1.5 trillion in today's present value, equivalent to up to 13% of their discounted lifetime income. This windfall for the initial generation resulted in an implicit tax on current workers, accounting for 70% of their pension contributions. However, the study also highlights the effectiveness of Sweden's 1999 notional defined-contribution pension reform in stabilizing this imbalance. Unlike many international counterparts, Sweden's reformed system successfully mitigates further generational inequities in the pension system.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Series: IFN working paper ; no. 1488 (2024)
    Subjects: Pensions; social security; pay-as-you-go; generational equity; generational accounting
    Scope: 1 Online-Ressource (circa 47 Seiten), Illustrationen