Pension Reform and Financial Investment in the United States and Canada
AbstractThis paper explores the meshing of pension politics and financial investment in Canada and the U.S. during the 1990s. Drawing on the institutionalist literature, the paper focuses on the relationship between ideas, finance and institutional legacies in the debate over the reform of earnings-related pension schemes (Canada/Quebec Pension Plan and Social Security). In Canada, the existence of a public investment board in the province of Quebec facilitated the advent of state financial investment as part of the 1998 reform of the Canada Pension Plan. In the U.S., policy learning -- the process by which experts and state officials evaluate the performance of previously enacted policies -- involved mainly a comparison between public and private pension benefits, as the growth of 401(k) and other savings schemes combined with exceptional stock- market performances stimulated financial optimism and legitimized what is commonly known as pension privatization (diverting contributions to individual savings accounts). As opposed to the situation prevailing in Canada, the idea of investing Social Security surpluses in equity faced overwhelming opposition in the U.S., despite the efforts of President Clinton to promote it, notably in his 1999 State of the Union address. Although pension privatization appeared as the most debated policy alternative in that country, the conjunction of divided government, the lack of trust between the President and the Republican majority in Congress, and the absence of short term "fiscal crisis," prevented the enactment of such a reform.
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Bibliographic InfoPaper provided by McMaster University in its series Social and Economic Dimensions of an Aging Population Research Papers with number 120.
Length: 49 pages
Date of creation: Sep 2004
Date of revision:
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More information through EDIRC
pensions; Social Security; privatization; policy learning; politics;
Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-21 (All new papers)
- NEP-FIN-2004-10-21 (Finance)
- NEP-PUB-2004-10-21 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
- Glenn Drover, 2002. "TILTING TOWARD MARKETIZATION: Reform of the Canadian Pension Plan," Review of Policy Research, Policy Studies Organization, vol. 19(3), pages 85-107, 09.
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