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Old Times, Better Times? German Miners’ Knappschaften, Pay-as-you-go Pensions, and Implicit Rates of Return, 1854–1913

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  • Tobias A. Jopp

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    Abstract

    This paper contributes to the literature on the weakness of modern pay-as-you-go social security systems in financing pensions by taking a business and economic historical perspective on the issue. It focuses on Prussian Knappschaften (plural of Knappschaft), which provided miners with compulsory invalidity and implicit old-age insurance, and studies the period from 1854 to 1913. Knappschaften used the pay-as-you-go mechanism, and, in the long-term, came under financial pressure by the rising number of pensioners. The question to be answered is whether Knappschaften were able to off er cohorts of miners entering the system at diff erent times the same implicit rates of return. Did Knappschaften provide an intergenerationally sustainable policy, or did adjustments of contributions and other parameters decrease the dividend for insured miners over time?

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    File URL: http://repec.rwi-essen.de/files/REP_11_238.pdf
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    Bibliographic Info

    Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0238.

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    Length: 38 pages
    Date of creation: Jan 2011
    Date of revision:
    Handle: RePEc:rwi:repape:0238

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    Keywords: Insurance; implicit rates of return; Knappschaft; mining; pay-as-you-go; pensions; Prussia; welfare state;

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    1. Sheilagh Ogilvie, 2004. "Guilds, efficiency, and social capital: evidence from German proto-industry," Economic History Review, Economic History Society, vol. 57(2), pages 286-333, 05.
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    3. Schnabel, Reinhold, 1997. "Rates of Return of the German Pay-As-You-Go Pension System," Sonderforschungsbereich 504 Publications 98-56, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
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    11. Timothy W. Guinnane & Jochen Streb, 2010. "Moral Hazard in a Mutual Health-Insurance System: German Knappschaften, 1867–1914," Ruhr Economic Papers 0163, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    12. Pierre Concialdi, 2006. "Demography, the cost of pensions and the move to pension funds," Review of Political Economy, Taylor & Francis Journals, vol. 18(3), pages 301-315.
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