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Beveridge versus Bismarck public-pension systems in integrated markets

  • Kolmar, Martin
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    The two basic systems according to which pay-as-you-go-financed public-pension systems can be organized are the (Anglo-Saxon) Beveridge system and the (continental) Bismarck system. An ideal Beveridge system provides flat-rate benefits, whereas an ideal Bismarck system provides earnings-related benefits. This paper analyzes the circumstances under which a Beveridge system can be sustainable in systems competition with a Bismarck system. The analysis reveals a much more complicated redistributive structure of the pension systems than only between high and low incomes. As a consequence, the sustainability depends on growth rates, and equilibria can exist where, contrary to the first intuition, even poor individuals prefer a Bismarck and rich individuals prefer a Beveridge system.

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    File URL: http://www.sciencedirect.com/science/article/B6V89-4MY6G74-2/2/80e170336d4eda8304cf64f61d8b2251
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    Article provided by Elsevier in its journal Regional Science and Urban Economics.

    Volume (Year): 37 (2007)
    Issue (Month): 6 (November)
    Pages: 649-669

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    Handle: RePEc:eee:regeco:v:37:y:2007:i:6:p:649-669
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    7. Guggenberger, Patrik & Kaul, Ashok & Kolmar, Martin, 2002. "Efficiency properties of labor taxation in a spatial model of restricted labor mobility," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 447-473, July.
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    10. Laszlo Goerke, 2000. "Bismarck versus Beveridge. Flat-Rate and Earnings-Related Unemployment Insurance in a General Efficiency Wage Framework," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(3), pages 243-, May.
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