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Macroeconomic Performance and the Design of Public Pension Programmes

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  • Richard Disney

    (University of Nottingham, and Institute for Fiscal Studies, London)

Abstract

I examine the impact of the design of the Irish public pension programme on two dimensions of Ireland’s macroeconomic performance - employment and the average saving rate. Two facets of the programme might affect these outcomes - the lack of generosity of the programme relative to other OECD countries, and the high degree of redistribution embedded in the programme. These characteristics suggest that the programme has little ‘crowding out’ effect on saving rates. For employment rates, the two facets have contradictory effects that ultimately cancel out in their aggregate effect. These findings are illustrated by using a cross-country analysis to simulate a counterfactual where Ireland instead had a pension programme with the average characteristics of OECD countries (i.e., both more generous and less redistributive).

Suggested Citation

  • Richard Disney, 2006. "Macroeconomic Performance and the Design of Public Pension Programmes," The Economic and Social Review, Economic and Social Studies, vol. 37(2), pages 175-195.
  • Handle: RePEc:eso:journl:v:37:y:2006:i:2:p:175-195
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    References listed on IDEAS

    as
    1. Richard Disney, 2005. "Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel," CESifo Working Paper Series 1541, CESifo Group Munich.
    2. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    3. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
    4. Richard Disney, 2004. "Are contributions to public pension programmes a tax on employment?," Economic Policy, CEPR;CES;MSH, vol. 19(39), pages 267-311, July.
    5. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, pages 74-112.
    6. Disney, Richard, 2000. "Declining public pensions in an era of demographic ageing: Will private provision fill the gap?," European Economic Review, Elsevier, vol. 44(4-6), pages 957-973, May.
    7. A. B. Atkinson & N. H. Stern, 1980. "On the switch from direct to indirect taxation," NBER Chapters,in: Econometric Studies in Public Finance, pages 195-224 National Bureau of Economic Research, Inc.
    8. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, pages 55-74.
    9. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 1-78.
    10. DeMarco, Gustavo & Rofman, Rafael & Whitehouse, Edward, 1998. "Supervising mandatory funded pension systems : issues and challenges," Social Protection and Labor Policy and Technical Notes 20113, The World Bank.
    11. Blau, Francine D. & Kahn, Lawrence M., 1999. "Institutions and laws in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 25, pages 1399-1461 Elsevier.
    12. Hans-Werner Sinn, 1999. "Pension Reform and Demographic Crisis: Why a Funded System is Needed and why it is not Needed," CESifo Working Paper Series 195, CESifo Group Munich.
    13. Jeff Dominitz & Charles F. Manski & Jordan Heinz, 2003. ""Will Social Security Be There For You?": How Americans Perceive Their Benefits," NBER Working Papers 9798, National Bureau of Economic Research, Inc.
    14. Richard Layte & Brian Nolan & Christopher T. Whelan, 2001. "Reassessing Income and Deprivation Approaches to the Measurement of Poverty in the Republic of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 32(3), pages 239-261.
    15. Queisser, Monika & Whitehouse, Edward, 2005. "Pensions at a glance: public policies across OECD countries," MPRA Paper 10907, University Library of Munich, Germany.
    16. Disney, Richard & Whitehouse, Edward, 1996. "What Are Occupational Pension Plan Entitlements Worth in Britain?," Economica, London School of Economics and Political Science, vol. 63(250), pages 213-238, May.
    17. Martin Feldstein, 1980. "International differences in social security and saving," NBER Chapters,in: Econometric Studies in Public Finance, pages 225-244 National Bureau of Economic Research, Inc.
    18. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 1-78.
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