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Pension systems and intragenerational redistribution when labor supply is endogenous

  • Alessandro, SOMMACAL

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

It is usually thought that a Beveridgean pension system redistributes income more than a Bismarckian one, since it ensures replacement ratios that decrease with income. We check the validity of this result when the fact that pension systems can redistribute also through their effects on labor income is taken into account. Labor market institutions turn out to be crucial. First we study an economy with a competitive labor market : quite surprisingly, inequality is unaffected by a reallocation of funds towards the Beveridgean system. Then we introduce a minimum wage that creates unemployment on the unskilled labor market : in this case the Beveridgean system is proved to reduce inequality.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2004008.

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Length: 31
Date of creation: 01 Mar 2004
Date of revision:
Handle: RePEc:ctl:louvir:2004008
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  1. J. Ignacio Conde Ruiz & Paola Profeta, 2004. "What Social Security: Beveridgean or Bismarckian?," 2004 Meeting Papers 317, Society for Economic Dynamics.
  2. Homburg, Stefan, 2014. "The Efficiency of Unfunded Pension Schemes," Hannover Economic Papers (HEP) dp-523, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  3. Hugett, M. & Ventura, G., 1997. "On the Distributional Effects of Social Security Reform," UWO Department of Economics Working Papers 9710, University of Western Ontario, Department of Economics.
  4. repec:fda:fdaddt:2003-03 is not listed on IDEAS
  5. Alexandra Rillaers & David de la Croix & Geraldine Mahieu, 2003. "How Should The Allocation Of Resources Adjust To The Baby Bust?," Working Papers. Serie AD 2003-27, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  6. Miles, David, 1999. "Modelling the Impact of Demographic Change upon the Economy," Economic Journal, Royal Economic Society, vol. 109(452), pages 1-36, January.
  7. Wrede, Matthias, 1998. "Pareto efficiency of the pay-as-you-go pension system in a three-period-OLG model," BERG Working Paper Series 27, Bamberg University, Bamberg Economic Research Group.
  8. Conde-Ruiz, J.I. & Galasso, V., 2000. "Early Retirement," Economics Working Papers eco2000/24, European University Institute.
  9. Breyer, Friedrich & Straub, Martin, 1991. "Welfare effects of unfunded pension systems when labor supply is endogenous," Discussion Papers, Series I 252, University of Konstanz, Department of Economics.
  10. Steve Ambler, 2000. "Optimal Time Consistent Fiscal Policy with Overlapping Generations," Cahiers de recherche CREFE / CREFE Working Papers 111, CREFE, Université du Québec à Montréal.
  11. Nelissen, J.H.M., 1995. "Lifetime income redistribution by the old-age state pension in The Netherlands," Other publications TiSEM 229e3649-f405-4cd6-878d-b, Tilburg University, School of Economics and Management.
  12. van Oorschot, W.J.H. & Boos, C.L.J., 1999. "Dutch pension policy and the ageing of the population," WORC Paper 99.03.003/2, Tilburg University, Work and Organization Research Centre.
  13. Cahuc, P. & Michel, P., 1992. "Minimum Wage, Unemployment and Growth," Papiers d'Economie Mathématique et Applications 92.35, Université Panthéon-Sorbonne (Paris 1).
  14. Susumu Imai & Michael P. Keane, 2004. "Intertemporal Labor Supply and Human Capital Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 601-641, 05.
  15. J. Ignacio Conde-Ruiz & Vincenzo Galasso, . "The Macroeconomic of Early Retirement," Working Papers 194, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  16. Juillard, Michel, 1996. "Dynare : a program for the resolution and simulation of dynamic models with forward variables through the use of a relaxation algorithm," CEPREMAP Working Papers (Couverture Orange) 9602, CEPREMAP.
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