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Labour market segmentation and pensions in the Polish defined-contribution scheme

Author

Listed:
  • Piotr Lewandowski
  • Kamil Stronski
  • Roma Keister

Abstract

In this paper we apply the cohort model of the pension scheme to analyse the impact of labour market segmentation, in particular the use of contracts on mandate, on expected retirement benefits in Poland. Heterogeneity of labour force and impact of differences in years of employment, contributions paid and account indexation are taken into consideration. The effects of policy instruments aimed at increasing the stream of contributions paid by workers with contracts of mandate are evaluated. We find that the expected retirement benefit in the segment of contracts of mandate is lower by 17% than in the segment of employment contracts. The major cause of this gap between segments are lower contributions in the case of men and shorter life-cycle employment in the case of women. The obligation to pay contributions on all contracts of mandate from the minimum wage level will enable closing the pension gap by ca. 4.4 pp. unless the obligation increases unemployment risk in the segment of contracts of mandate. Additional saving of 2% of the gross wage during spells of work on contract of mandate reduces the gap by less than 1 pp.

Suggested Citation

  • Piotr Lewandowski & Kamil Stronski & Roma Keister, 2015. "Labour market segmentation and pensions in the Polish defined-contribution scheme," IBS Working Papers 9/2015, Instytut Badan Strukturalnych.
  • Handle: RePEc:ibt:wpaper:wp092015
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    File URL: http://ibs.org.pl/app/uploads/2015/10/IBS_Working_Paper_09_2015.pdf
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    References listed on IDEAS

    as
    1. Piotr Arak & Piotr Lewandowski & Piotr Zakowiecki, 2014. "Dual labour market in Poland – proposals for overcoming the deadlock," IBS Policy Papers 1/2014, Instytut Badan Strukturalnych.
    2. Boeri, Tito, 2011. "Institutional Reforms and Dualism in European Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.),Handbook of Labor Economics, edition 1, volume 4, chapter 13, pages 1173-1236, Elsevier.
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    Cited by:

    1. Lewandowski, Piotr & Góra, Marek & Lis, Maciej, 2017. "Temporary Employment Boom in Poland: A Job Quality vs. Quantity Trade-off?," IZA Discussion Papers 11012, Institute of Labor Economics (IZA).
    2. Piotr Lewandowski & Jakub Sawulski & Kamil Stronski, 2016. "Labour market segmentation and the financial situation of the pension system in Poland," IBS Working Papers 10/2016, Instytut Badan Strukturalnych.
    3. Jakub Sawulski & Iga Magda & Piotr Lewandowski, 2019. "Will the Polish pension system go bankrupt?," IBS Policy Papers 02/2019, Instytut Badan Strukturalnych.
    4. Elena Jarocinska & Anna Ruzik-Sierdzinska, 2016. "The impact of pension system reform on projected old-age income: the case of Poland," CASE Network Studies and Analyses 0482, CASE-Center for Social and Economic Research.

    More about this item

    Keywords

    labour market segmentation; pensions; defined-contribution pension scheme;

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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