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Pensions and Distribution in an Ageing Society: A Non-Conventional View

In: Wages, Employment, Distribution and Growth

Author

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  • Sergio Cesaratto

Abstract

This chapter explores from a Classical point of view the economic impact of ageing with a particular concern for the future of Social Security organized along pay-as-you-go (PAYG) lines. Elsewhere I have shown the shortcomings of the two major pension reforms under discussion. Cesaratto (2002, 2005: chapter 2, 2006a) pointed out the pros and cons of the Notional Defined Contribution (NDC) reforms that, although in principle (and not without delay), provide the financial stability of PAYG, attain it in the most obvious way of cutting pension benefits, thus leaving aside the social sustainability of PAYG. Cesaratto (2002, 2005: chapters 3 and 4, 2006b) put forward the various shortcomings of the transition plans aimed at the creation of fully-funded (FF) schemes. Cesaratto (2005: chapter 6) showed that, according to the theory of effective demand, the welfare state, and PAYG in particular, are not necessarily detrimental to economic growth, in fact they may foster it. I also regarded the welfare state and PAYG as part of a Classical view of income distribution in which there is no natural distribution setting associated with factors’ full employment as in the Neoclassical theory. According to this view, it is the political opposition to changes in income distribution favourable to labour, rather than the Neoclassical mechanical association between distribution and output, that may determine a negative influence of social spending on growth.

Suggested Citation

  • Sergio Cesaratto, 2006. "Pensions and Distribution in an Ageing Society: A Non-Conventional View," Palgrave Macmillan Books, in: Eckhard Hein & Arne Heise & Achim Truger (ed.), Wages, Employment, Distribution and Growth, chapter 8, pages 181-205, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-37178-1_9
    DOI: 10.1057/9780230371781_9
    as

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