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Pensions and Contemporary Socioeconomic Change

In: Social Security Pension Reform in Europe

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  • Assar Lindbeck

Abstract

In developed countries, pension systems emerged as a political response to socio-econo-mic changes brought about by industrialisation and urbanisation in the late 19th and early 20th centuries. Today, new socio-economic changes create both rationales and poli-ti-cal forces for revisions of existing pension systems. Changes in demo-gra-phy, real wage growth and real interest rates are perhaps the most obvious exam-ples. Increased instability of the family, more heterogeneity among individuals, greater international mobility of labour and capital, and ambitions to encourage individual responsibility also have important implications for pension systems. When discussing these issues, it is useful to set up a more elaborate classification of pension systems than the usual distinction between defined-benefit (DB) and defined-contribution (DC) systems. The choice of an appropriate taxonomy depends, of course, on the issues to be raised. One question that is focused on in this paper concerns the consequences of socio-economic shocks on the distribution of income and the sharing of income risk among generations. It turns out that the distinction between pension systems with exogenous and endogenous contribution rates (tax rates) then becomes crucial. But the paper also deals with socio-economic changes that are induced by the pension system itself via behavioural adjustments of individuals – and the feedback of these changes on the pension system. When dealing with such adjust-ments, highly relevant features of pension systems are the degree to which they are actuarial and funded, respectively – two aspects that are related but not the identical.

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This chapter was published in:

  • Martin Feldstein & Horst Siebert, 2002. "Social Security Pension Reform in Europe," NBER Books, National Bureau of Economic Research, Inc, number feld02-2.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10668.

    Handle: RePEc:nbr:nberch:10668

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    Cited by:
    1. Lindbeck, Assar & Persson, Mats, 2000. "What Are the Gains from Pension Reform?," Working Paper Series 535, Research Institute of Industrial Economics.
    2. Zamac, Jovan, 2007. "Pension design when fertility fluctuates: The role of education and capital mobility," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 619-639, April.
    3. Thomas Aronsson & James R. Walker, 2010. "Labor Supply, Tax Base and Public Policy in Sweden," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 127-158 National Bureau of Economic Research, Inc.
    4. Wagener, Andreas, 2004. "On intergenerational risk sharing within social security schemes," European Journal of Political Economy, Elsevier, vol. 20(1), pages 181-206, March.
    5. Jovan Zamac, 2005. "Pension Design when Fertility Fluctuates: The Role of Capital Mobility and Education Financing," CESifo Working Paper Series 1569, CESifo Group Munich.
    6. Bossi, Luca, 2008. "Intergenerational risk shifting through social security and bailout politics," Journal of Economic Dynamics and Control, Elsevier, vol. 32(7), pages 2240-2268, July.
    7. Zamac , Jovan, 2005. "Winners and Losers from a Demographic Shock under Different Intergenerational Transfer Schemes," Working Paper Series 2005:13, Uppsala University, Department of Economics.

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