Globalization, Social Security, and International Transfers
AbstractIn this paper, we quantify the impact of globalization (i.e., integration of global capital markets) on intergenerational transfers mediated through Pay As You Go (PAYG) public pension systems in more developed countries (MDCs), as well as impacts on the intergenerational distribution of income and wealth. Our basic finding is that, while globalization is likely to erode the pension income of older persons, it will enhance their wealth, leaving their overall spending power little changed. The working age population, which earns lower wages, is an unambiguous loser from the globalization process, at least to the extent that we limit ourselves to a neoclassical analysis of the phenomenon. The main impact of globalization is unlikely, however, to be captured by economy-wide averages such as those presented in this paper. This is the redistribution from lifetime non-savers, especially the poor, who depend on labor income while young and wage-based intergenerational transfers when old, to lifetime savers, who are able to take advantage of improved capital returns. While we concentrate on MDCs in this paper, we make the point that economic impacts of globalization in less developed countries (LDCs) are opposite in sign and greater in relative magnitude. The latter is the case because reallocation of capital gives rise to a greater proportional change in the capital-output ratio in LDCs than in MDCs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Institute for Applied Systems Analysis in its series Working Papers with number ir99056.
Date of creation: Oct 1999
Date of revision:
Contact details of provider:
Postal: A-2361 Laxenburg
Web page: http://www.iiasa.ac.at/Publications/Catalog/PUB_ONLINE.html
More information through EDIRC
This paper has been announced in the following NEP Reports:
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.:
- David M. Cutler & James M. Poterba & Louise M. Sheiner & Lawrence H. Summers, 1990.
"An Aging Society: Opportunity or Challenge?,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 21(1), pages 1-74.
- Paul R. Masson & Ralph W. Tryon, 1990.
"Macroeconomic Effects of Projected Population Aging in Industrial Countries,"
IMF Staff Papers,
Palgrave Macmillan, vol. 37(3), pages 453-485, September.
- Paul R. Masson & Ralph W. Tryon, 1990. "Macroeconomic Effects Of Projected Population Aging In Industrial Countries," IMF Working Papers 90/5, International Monetary Fund.
- F.L. MacKellar & H. Reisen, 1998. "International Diversification of Pension Assets Is No Panacea for Population Aging," Working Papers ir98034, International Institute for Applied Systems Analysis.
- Matthew Higgins, 1997. "Demography, national savings and international capital flows," Staff Reports 34, Federal Reserve Bank of New York.
- F.L. MacKellar & T.Y. Ermolieva, 1999. "The IIASA Social Security Reform Project Multiregional Economic-Demographic Growth Model: Policy Background and Algebraic Structure," Working Papers ir99007, International Institute for Applied Systems Analysis.
- Blanchet, Didier & Kessler, Denis, 1992. "Pension Systems in Transition Economies: Perspectives and Choices Ahead," Public Finance = Finances publiques, , vol. 47(Supplemen), pages 21-33.
- Sylvester J. Schieber & John B. Shoven, 1994. "The Consequences of Population Aging on Private Pension Fund Saving and Asset Markets," NBER Working Papers 4665, National Bureau of Economic Research, Inc.
- Peter Yoo, 1994. "Boom or bust? the economic effects of the baby boom," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 13-22.
- Guillermo Larraín & Helmut Reisen & Julia von Maltzan, 1997. "Emerging Market Risk and Sovereign Credit Ratings," OECD Development Centre Working Papers 124, OECD Publishing.
- Landis MacKellar & Helmut Reisen, 1998. "A Simulation Model of Global Pension Investment," OECD Development Centre Working Papers 137, OECD Publishing.
- repec:fth:harver:1490 is not listed on IDEAS
- A. Westlund & T.Y. Ermolieva & F.L. MacKellar, 1999. "Analysis and Forecasting of Social Security: A Study of Robustness," Working Papers ir99004, International Institute for Applied Systems Analysis.
- Holzmann, Robert, 2000.
"Can investments in emerging markets help to solve the aging problem ?,"
Social Protection Discussion Papers
23070, The World Bank.
- Robert Holzmann, 2000. "Can Investments in Emerging Markets Help to Solve the Aging Problem?," CESifo Working Paper Series 304, CESifo Group Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.