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Social security, income inequality and growth

Author

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  • LE GARREC, GILLES

Abstract

In most industrial countries, public pension systems redistribute from workers to retired people, not from high-income to low-income earners. They are close actuarial fairness. However, they are not all equivalent. In particular, some pension benefits are linked to full lifetime average earnings, while others are only linked to partial earnings history. In the latter case, we then show in this article that an actuarially fair pay-as-you-go pension system can both reduce lifetime income inequality and enhance economic growth. We also shed light on the dilemma between inequality and economic growth in retirement systems: greater progressivity results in less lifetime inequlity but also less growth.

Suggested Citation

  • Le Garrec, Gilles, 2012. "Social security, income inequality and growth," Journal of Pension Economics and Finance, Cambridge University Press, vol. 11(1), pages 53-70, January.
    • Handle: RePEc:cup:jpenef:v:11:y:2012:i:01:p:53-70_00
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    Citations

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    Cited by:

    1. Wang, Lijian & Béland, Daniel & Zhang, Sifeng, 2014. "Pension fairness in China," China Economic Review, Elsevier, vol. 28(C), pages 25-36.
    2. Gilles Le Garrec, 2015. "Increased longevity and social security reform: questioning the optimality of individual accounts when education matters," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(2), pages 329-352, April.
    3. T. Buyse & F. Heylen & R. Van De Kerckhove, 2011. "Pension reform, employment by age, and long-run growth in OECD countries," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/719, Ghent University, Faculty of Economics and Business Administration.
    4. Buyse, Tim & Heylen, Freddy & Van De Kerckhove, Renaat, 2017. "Pension reform in an OLG model with heterogeneous abilities," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(2), pages 144-172, April.
    5. Gustafsson, Johan, 2021. "Public Pension Reform and the Equity-Efficiency Trade-off," Umeå Economic Studies 992, Umeå University, Department of Economics.
    6. Gilles Le Garrec, 2012. "Social security and growth in an agin economy: the case of actuarial fairness," Documents de Travail de l'OFCE 2012-18, Observatoire Francais des Conjonctures Economiques (OFCE).
    7. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09hi6860cc6 is not listed on IDEAS
    8. Tim Buyse & Freddy Heylen & Renaat Van de Kerckhove, 2013. "Pension reform, employment by age, and long-run growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 769-809, April.
    9. Gilles Le Garrec & Stéphane Lhuissier, 2011. "Life expectancy, heavy work and the return to education: lessons for the social security reform," SciencePo Working papers Main hal-01069511, HAL.
    10. repec:hal:wpspec:info:hdl:2441/eu4vqp9ompqllr09hi6860cc6 is not listed on IDEAS
    11. Gilles Le Garrec, 2012. "Social security and growth in an aging economy : the case of acturial fairness," SciencePo Working papers Main hal-01070354, HAL.
    12. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09hi6860cc6 is not listed on IDEAS
    13. Vanesa Jorda & Jose M. Alonso, 2020. "What works to mitigate and reduce relative (and absolute) inequality?: A systematic review," WIDER Working Paper Series wp-2020-152, World Institute for Development Economic Research (UNU-WIDER).
    14. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9jiq0m4pg6 is not listed on IDEAS

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