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Redistributive effects of the Czech pension system - microeconomic approach
[Redistribuční dopady českého důchodového systému - mikroekonomický přístup]

Author

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  • Alena Vančurová
  • Eliška Čejková
  • Stanislav Klazar

Abstract

The burning issue within the pension system in the Czech Republic is the level of coverage of self-employed persons. According to the data, they constantly report their income near the level of minimal basis during their lifetime. We estimate the replacement rates, lifetime benefit and lifetime contribution index using updated unique dataset of Assessment Base for Pension Insurance to shed the light on this problem. We can sum up that the income distribution of self-employed persons is highly concentrated, with the peak at the profit level which corresponds with the minimal base for pension contribution. Due to the high degree of the Czech pension system progressivity, the general result is that the self-employed persons are better off in comparisons with the employees if we concentrate on relative measures, but worst off if we concentrate on nominal measures. The only way how to solve this puzzle may be the effective information campaign which will reveal the future level of pensions /replacement rates/ to encourage the self-employed persons to participate in other, broadly defined, pillars of pension system.

Suggested Citation

  • Alena Vančurová & Eliška Čejková & Stanislav Klazar, 2021. "Redistributive effects of the Czech pension system - microeconomic approach [Redistribuční dopady českého důchodového systému - mikroekonomický přístup]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2021(3), pages 41-59.
    • Handle: RePEc:prg:jnlcfu:v:2021:y:2021:i:3:id:564:p:41-59
    DOI: 10.18267/j.cfuc.564
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    References listed on IDEAS

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    1. Diakite, Keivan & Devolder, Pierre, 2021. "Progressive Pension Formula and Life Expectancy Heterogeneity," LIDAM Reprints ISBA 2021030, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    2. Gruber, Jonathan, 1997. "The Incidence of Payroll Taxation: Evidence from Chile," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 72-101, July.
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    More about this item

    Keywords

    Income distribution; Employee; Self-employed persons; Pensions; Replacement rate; Redistribution; Solidarity; Progressivity; Lifetime incidence; Příjmové rozdělení; Zaměstnanec; OSVČ; Starobní důchod; Náhradový poměr; Přerozdělování; Solidarita; Progresivita; Celoživotní dopad;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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