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The International Spillover Effects of Pension Reform

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  • Yvonne Adema
  • Lex Meijdam
  • Harrie A. A Verbon

Abstract

This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlapping-generations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case the funded country shares both in the costs and the benefits of the reform. However, if a Pareto-improving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2005/wp-cesifo-2005-09/cesifo1_wp1540.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1540.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1540

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Keywords: international spillover effects; pension reform;

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References

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  1. Bovenberg, A L, 2003. "Financing Retirement in the European Union," International Tax and Public Finance, Springer, vol. 10(6), pages 713-34, November.
  2. Hans Fehr & Sabine Jokisch & Laurence Kotlikoff, 2003. "The Developed World's Demographic Transition - The Roles of Capital Flows, Immigration, and Policy," NBER Working Papers 10096, National Bureau of Economic Research, Inc.
  3. Axel Boersch-Supan & Alexander Ludwig & Joachim Winter, 2005. "Aging, Pension Reform, and Capital Flows: A Multi-Country Simulation Model," NBER Working Papers 11850, National Bureau of Economic Research, Inc.
  4. Brunner, Johann K., 1993. "Transition from a pay-as-you-go to a fully-funded pension system: The case of differing individuals and intragenerational fairness," Discussion Papers, Series 1 266, University of Konstanz, Department of Economics.
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  6. Martin Feldstein, 2005. "Structural Reform of Social Security," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 33-55, Spring.
  7. Torsten Persson, 1983. "Deficits and Intergenerational Welfare in Open Economies," NBER Working Papers 1083, National Bureau of Economic Research, Inc.
  8. PESTIEAU, Pierre & PIASER, Gwanaël & SATO, Motohiro, . "PAYG pension systems with capital mobility," CORE Discussion Papers RP -1869, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
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  14. Pascal Belan & Philippe Michel & Pierre Pestieau, 1998. "Pareto-Improving Social Security Reform," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 23(2), pages 119-125, December.
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  16. Breyer, Friedrich & Straub, Martin, 1991. "Welfare effects of unfunded pension systems when labor supply is endogenous," Discussion Papers, Series 1 252, University of Konstanz, Department of Economics.
  17. Meijdam, A.C. & Verhoeven, M.J.M., 1997. "Comparative dynamics in perfect foresight models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73875, Tilburg University.
  18. Pemberton, James, 2000. "National and international privatisation of pensions," European Economic Review, Elsevier, vol. 44(10), pages 1873-1896, December.
  19. Marko Kothenbürger & Panu Poutvaara, 2006. "Social Security Reform and Investment in Education: Is There Scope for a Pareto Improvement?," Economica, London School of Economics and Political Science, vol. 73(290), pages 299-319, 05.
  20. Adema, Y. & Meijdam, A.C. & Verbon, H.A.A., 2006. "Beggar Thy Thrifty Neighbour: The International Spillover Effects of Pensions Under Population Ageing," Discussion Paper 2006-47, Tilburg University, Center for Economic Research.
  21. Judd, Kenneth L., 1982. "An alternative to steady-state comparisons in perfect foresight models," Economics Letters, Elsevier, vol. 10(1-2), pages 55-59.
  22. Marko Köthenbürger & Panu Poutvaara, 2004. "Social Security Reform and Intergenerational Trade: Is there Scope for a Pareto-Improvement?," Public Economics 0404008, EconWPA.
  23. Feldstein, Martin, 2005. "Structural Reform of Social Security," Scholarly Articles 2794830, Harvard University Department of Economics.
  24. Yvonne Adema & Lex Meijdam & Harrie Verbon, 2008. "Beggar thy thrifty neighbour," Journal of Population Economics, Springer, vol. 21(4), pages 933-959, October.
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Citations

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Cited by:
  1. Konrad, Kai A. & Skaperdas, Stergios, 2012. "The market for protection and the origin of the state," Munich Reprints in Economics 13961, University of Munich, Department of Economics.
  2. MARCHAND, Maurice & PESTIEAU, Pierre & PIASER, Gwenaël, 2004. "PAYG pension systems with capital mobility," CORE Discussion Papers 2004031, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Fedotenkov, I., 2012. "Pensions and ageing in a globalizing world. International spillover effects via trade and factor mobility," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5590843, Tilburg University.
  4. ARTIGE, Lionel & DEDRY, Antoine & PESTIEAU, Pierre, 2014. "Social security and economic integration," CORE Discussion Papers 2014009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Igor Fedotenkov & Lex Meijdam, 2013. "Crisis and Pension System Design in the EU: International Spillover Effects Via Factor Mobility and Trade," De Economist, Springer, vol. 161(2), pages 175-197, June.

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