Beveridge versus Bismarck public-pension systems in integrated markets
AbstractThe two basic systems according to which pay-as-you-go-financed public-pension systems can be organized are the (Anglo-Saxon) Beveridge system and the (continental) Bismarck system. An ideal Beveridge system provides flat-rate benefits, whereas an ideal Bismarck system provides earnings-related benefits. This paper analyzes the circumstances under which a Beveridge system can be sustainable in systems competition with a Bismarck system. The analysis reveals a much more complicated redistributive structure of the pension systems than only between high and low incomes. As a consequence, the sustainability depends on growth rates, and equilibria can exist where, contrary to the first intuition, even poor individuals prefer a Bismarck and rich individuals prefer a Beveridge system.
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Bibliographic InfoArticle provided by Elsevier in its journal Regional Science and Urban Economics.
Volume (Year): 37 (2007)
Issue (Month): 6 (November)
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Market integration System competition Pension systems;
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