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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. Breyer, Friedrich & Straub, Martin, 1993. "Welfare effects of unfunded pension systems when labor supply is endogenous," Journal of Public Economics, Elsevier, vol. 50(1), pages 77-91, January.
  2. Willem H. Buiter, 1979. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," NBER Working Papers 0352, National Bureau of Economic Research, Inc.
  3. 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.
  4. BELAN, Pascal & PESTIEAU, Pierre, 1997. "Privatizing social security: a critical assessment," CORE Discussion Papers 1997084, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Meijdam, Lex & Verhoeven, Marijn, 1998. "Comparative Dynamics in Perfect-Foresight Models," Computational Economics, Society for Computational Economics, vol. 12(2), pages 115-24, October.
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  7. Börsch-Supan, Axel & Ludwig, Alexander & Winter, Joachim, 2001. "Aging, pension reform, and capital flows: A multi-country simulation model," Sonderforschungsbereich 504 Publications 01-08, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  8. BELAN, Pascal & MICHEL, Philippe & PESTIEAU, Pierre, . "Pareto-improving social security reform," CORE Discussion Papers RP -1372, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Casamatta, Georges & Cremer, Helmuth & Pestieau, Pierre, 2000. " The Political Economy of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 503-22, June.
  10. 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.
  11. Pemberton, James, 2000. "National and international privatisation of pensions," European Economic Review, Elsevier, vol. 44(10), pages 1873-1896, December.
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  14. Homburg, Stefan, 2014. "The Efficiency of Unfunded Pension Schemes," Hannover Economic Papers (HEP) dp-523, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  15. Bovenberg, A.L., 2002. "Financing Retirement in the European Union," Open Access publications from Tilburg University urn:nbn:nl:ui:12-90150, Tilburg University.
  16. Yvonne Adema & Lex Meijdam & Harrie Verbon, 2008. "Beggar thy thrifty neighbour," Journal of Population Economics, Springer, vol. 21(4), pages 933-959, October.
  17. 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.
  18. Feldstein, Martin, 2005. "Structural Reform of Social Security," Scholarly Articles 2794830, Harvard University Department of Economics.
  19. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
  20. Marko Köthenbürger & Panu Poutvaara, 2004. "Social Security Reform and Intergenerational Trade: Is there Scope for a Pareto-Improvement?," Public Economics 0404008, EconWPA.
  21. Stefan Homburg & Wolfram Richter, 1993. "Harmonizing public debt and public pension schemes in the European community," Journal of Economics, Springer, vol. 7(1), pages 51-63, December.
  22. Köthenbürger, Marko & Poutvaara, Panu, 2006. "Social security reform and investment in education: Is there scope for a Pareto improvement?," Munich Reprints in Economics 19487, University of Munich, Department of Economics.
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Citations

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Cited by:
  1. Kai A. Konrad & Stergios Skaperdas, 2005. "The Market for Protection and the Origin of the State," CESifo Working Paper Series 1578, CESifo Group Munich.
  2. 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.
  3. 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).
  4. 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.
  5. ARTIGE, Lionel & DEDRY, Antoine & PESTIEAU, Pierre, 2013. "Social security and economic integration," CORE Discussion Papers 2013037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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