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Future pensions and changes in earning histories—a microsimulation analysis for Germany

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  • Johannes Geyer
  • Viktor Steiner

Abstract

Basing on a microsimulation model, the integrated data-base from the German pension insurance and the German Socio-Economic Panel Study we analyze future pensions across cohorts born between 1937–71. The microsimulation model accounts for changes in the individuals\' earnings activities in the times of demographic changes in the context of the long-run pension reforms. We consider also the effects of increasing the statutory retirement age and decreasing the level of benefits resulting from the implementation of the sustainability factor (Nachhaltigkeitsfaktor). The outcomes of the simulations show that both the labor market developments since the unification and the recent pensions reform will have a significant impact on the level of retirement benefits, in particular those of younger cohorts. There are also clear differences between East and West Germany, between sexes and education levels. If the unfavorable tendencies present on the labor market since the unification are sustained, the level of future pensions among younger birth cohorts in East Germany will fall dramatically. However, even in the case of the more optimistic labor market scenario the overall negative trend in the evolution of pension benefits of the younger birth cohorts in Germany will be significantly weaker but not reversed.

Suggested Citation

  • Johannes Geyer & Viktor Steiner, 2011. "Future pensions and changes in earning histories—a microsimulation analysis for Germany," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 28.
  • Handle: RePEc:eko:ekoeko:28_39
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    File URL: http://ekonomia.wne.uw.edu.pl/ekonomia/getFile/331
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    References listed on IDEAS

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    1. Johannes Geyer & Viktor Steiner, 2010. "Public Pensions, Changing Employment Patterns, and the Impact of Pension Reforms across Birth Cohorts: A Microsimulation Analysis for Germany," Discussion Papers of DIW Berlin 984, DIW Berlin, German Institute for Economic Research.
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    4. David A. Wise, 1994. "Studies in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise94-1, March.
    5. Ralf K. Himmelreicher & Dina Frommert, 2006. "Gibt es Hinweise auf zunehmende Ungleichheit der Alterseinkünfte und zunehmende Altersarmut?: Der Einfluss von Erwerbs- und Familienbiographien auf die Rentenhöhe in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(1), pages 108-130.
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