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The Gains from Pension Reform

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  • Lindbeck, Assar

    (Institute for International Economic Studies, Stockholm University)

  • Persson, Mats

    (Institute for International Economic Studies, Stockholm University)

Abstract

We classify social security pension systems in three dimensions: actuarial versus non-actuarial, funded versus unfunded, and defined-benefit versus defined-contribution systems. Recent pension reforms are discussed in terms of these dimensions. Shifting to a more actuarial system reduces labor-market distortions, although limiting the scope for redistribution. Shifting to a funded system may increase saving, redistribute income to future generations and distort contemporary labor supply. A partial shift to a funded system helps individuals diversify their pension assets. A shift from a defined-benefit to a defined-contribution system means that income risk will be shifted from workers to pensioners.
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Suggested Citation

  • Lindbeck, Assar & Persson, Mats, 2002. "The Gains from Pension Reform," Seminar Papers 712, Stockholm University, Institute for International Economic Studies.
    • Handle: RePEc:hhs:iiessp:0712
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    Keywords

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    JEL classification:

    • H00 - Public Economics - - General - - - General
    • J00 - Labor and Demographic Economics - - General - - - General

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