Public Sector Pension Policies and Capital Accumulation in Emerging Economies
AbstractIn many emerging economies pension programs of public sector workers are more generous than pension programs of private sector workers. In this paper we investigate public pension reforms that improve efficiency and welfare by reallocating government resources from non-productive public pensions to productive public education and infrastructure investments. We argue that the opportunity costs of running generous public pension schemes for civil servants are potentially large in emerging economies that often suffer from low public investments in education and infrastructure. In addition, we quantitfy the savings distortions as well as the tax distortions from running a generous public pension program. Calculating transitions to the post-reform steady state, we find that welfare losses for the generation born before the reform are offset by welfare gains by the generations born after the reform.
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Bibliographic InfoPaper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2009-10.
Length: 30 pages
Date of creation: Jun 2009
Date of revision:
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More information through EDIRC
Social Security Reform; Generous Public Sector Pensions; Capital Accumulation; Public Education and Infrastructure Investments;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- 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-2009-07-03 (All new papers)
- NEP-DEV-2009-07-03 (Development)
- NEP-EDU-2009-07-03 (Education)
- NEP-MAC-2009-07-03 (Macroeconomics)
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