Privatization of Public Pensions in Germany: Who Gains and How Much? / Privatisierung der deutschen Rentenversicherung: Wer gewinnt und wieviel?
This paper examines the distributional and efficiency effects of pension privatization in Germany. Starting from a benchmark that reflects the current unfunded pension system, a fully funded system is introduced. The accrued benefits of the old system are financed by alternative tax combinations as well as deficit increases. The quantitative analysis is based on an Auerbach-Kotlikoff type simulation model that distinguishes between five lifetime income classes within each age cohort. The simulations reveal a clear trade-off between the efficiency and equity aspects of alternative financing schemes. While consumption taxes are the most efficient financing instrument, they also undermine intra- and intergenerational equity. Phasing-out the unfunded system on the other hand not only dampens the income redistribution across and within generations, but also reduces the efficiency gains dramatically.
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Volume (Year): 218 (1999)
Issue (Month): 5-6 (October)
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References listed on IDEAS
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- Bernd Raffelhüschen, 1993. "Funding social security through Pareto-optimal conversion policies," Journal of Economics, Springer, vol. 7(1), pages 105-131, December.
- Feldstein, Martin, 1996.
"The Missing Piece in Policy Analysis: Social Security Reform,"
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- Martin Feldstein, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," NBER Working Papers 5413, National Bureau of Economic Research, Inc.
- Homburg, Stefan, 1997. "Kapitaldeckung als praktikable Leitidee," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 61-85.
- Homburg, Stefan & Richter, Wolfram, 1990. "Eine effizienzorientierte Reform der GRV," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 183-191..
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