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Public Pensions and Growth


  • Berthold U. Wigger


This paper studies the short- and long-run effects of pay-as-you-go financed public pensions on productivity growth and discusses the possibility of a Pareto-improving reform. It shows that a reduction of those intergenerational transfers that are inherent in the leads to a permanent increase in productivity growth, a Pareto-improvement does not result. Yet, there is scope for a Pareto-improving public pension reform. Such a reform implies distributing public pension revenues in the form of savings subsidies rather that as lump-sum pension benefits.

Suggested Citation

  • Berthold U. Wigger, 1999. "Public Pensions and Growth," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 56(2), pages 241-241, June.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(199906)56:2_241:ppag_2.0.tx_2-q

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    References listed on IDEAS

    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Gilles Saint-Paul, 1992. "Fiscal Policy in an Endogenous Growth Model," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1243-1259.
    3. Pascal Belan & Pierre Pestieau, 1999. "Privatizing Social Security: A Critical Assessment," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 24(1), pages 114-130, January.
    4. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 640-647.
    5. Breyer, Friedrich & Straub, Martin, 1993. "Welfare effects of unfunded pension systems when labor supply is endogenous," Journal of Public Economics, Elsevier, vol. 50(1), pages 77-91, January.
    6. Marchand, Maurice & Michel, Philippe & Pestieau, Pierre, 1996. "Intergenerational transfers in an endogenous growth model with fertility changes," European Journal of Political Economy, Elsevier, vol. 12(1), pages 33-48, April.
    7. King, Ian & Ferguson, Don, 1993. "Dynamic inefficiency, endogenous growth, and Ponzi games," Journal of Monetary Economics, Elsevier, vol. 32(1), pages 79-104, August.
    8. Caballero, Ricardo J. & Lyons, Richard K., 1990. "Internal versus external economies in European industry," European Economic Review, Elsevier, vol. 34(4), pages 805-826, June.
    9. Homburg, Stefan & Richter, Wolfram, 1990. "Eine effizienzorientierte Reform der GRV," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 183-191..
    10. BELAN, Pascal & MICHEL, Philippe & PESTIEAU, Pierre, 1996. "Pareto improving social security reform with endogenous growth," CORE Discussion Papers 1996057, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Akira Yakita, 2006. "Life expectancy, money, and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(3), pages 579-592, July.
    2. Andreas Irmen & Berthold U. Wigger, 2002. "Trade Union Objectives and Economic Growth," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(1), pages 1-49, February.
    3. Yang Zaigui, 2005. "Pay-As-You-Go Public Pension Systems: Two-sided Altruism and Endogenous Growth," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 1(1), pages 1-13, June.
    4. Weizsäcker, Robert K. von & Wigger, Berthold U., 2001. "Rentenfinanzierung und intergenerationelle Gerechtigkeit : Eine wachstumstheoretische Perspektive," Discussion Papers 606, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    5. Damjanovic, Tatiana, 2003. "The possibility of Pareto-Improving Pension Reform: More Arguments," Royal Economic Society Annual Conference 2003 53, Royal Economic Society.
    6. Debus Martin & Michaelis Jochen, 2006. "Ausbildung, Erwerbsphase, Renteneintrittdemografischer Wandel und optimale Zeitallokation im Lebenszyklus / Education, Working Period, Retirement - Demographic Change and Optimal Time Allocation Withi," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(6), pages 611-628, December.
    7. Michele Gragnolati & Ole Hagen Jorgensen & Romero Rocha & Anna Fruttero, 2011. "Growing Old in an Older Brazil : Implications of Population Ageing on Growth, Poverty, Public Finance, and Service Delivery," World Bank Publications, The World Bank, number 2351.
    8. Richter, Wolfram F. & Braun, Christoph, 2009. "Efficient Subsidization of Human Capital Accumulation with Overlapping Generations and Endogenous Growth," IZA Discussion Papers 4629, Institute for the Study of Labor (IZA).

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