Privatization of Public Pensions in Germany: Who Gains and How Much?
AbstractThis paper examines the distributional and efficiency effects of pension privatization in Germany. Starting from a benchmark that reflects the current unfunded pension system, a fully funded system is introduced. The accrued benefits of the old system are financed by alternative tax combinations as well as deficit increases. The quantitative analysis is based on an Auerbach-Kotlikoff type simulation model that distinguishes between five lifetime income classes within each age cohort. The simulations reveal a clear trade-off between the efficiency and equity aspects of alternative financing schemes. While consumption taxes are the most efficient financing instrument, they also undermine intra- and intergenerational equity. Phasing-out the unfunded system on the other hand not only dampens the income redistribution across and within generations, but also reduces the efficiency gains dramatically.
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Bibliographic InfoArticle provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.
Volume (Year): 218 (1999)
Issue (Month): 5+6 (May)
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pension reform; computable overlapping generations models;
Other versions of this item:
- Fehr, Hans, 1998. "Privatization of public pensions in Germany: Who gains and how much?," TÃ¼binger DiskussionsbeitrÃ¤ge 148, University of Tübingen, School of Business and Economics.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
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