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When the State Mirrors the Family: The Design of Pension Systems

Author

Listed:
  • Vincenzo Galasso

    (CEPRA, Institute of Economics, Universita' della Svizzera Italiana)

  • Paola Profeta

    () (Econpubblica, Bocconi University, Milan)

Abstract

We study how the prevailing internal organization of the family affected the initial design of pension systems. Our theoretical framework predicts that, in society with weak family ties, pensions systems were introduced to act as a safety net, while in societies with strong ties they replicate the tight link between generations by providing generous benefits. Using a historical classification of family ties, we show that in societies dominated by (weak ties) absolute nuclear families (f.i. Anglo-Saxon countries), safety net pension systems emerged; and viceversa in societies dominated by strong families. These results are robust to controlling for alternative legal, religious, and political explanations. Evidence on individual data confirm these findings: US citizens whose ancestors came from countries featuring strong ties (communitarian or egalitarian nuclear) families prefer to rely on the government as a provider of old age security through generous retirement benefits.

Suggested Citation

  • Vincenzo Galasso & Paola Profeta, 2012. "When the State Mirrors the Family: The Design of Pension Systems," CEPRA working paper 1201, USI Università della Svizzera italiana.
  • Handle: RePEc:lug:wcepra:1201
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bertocchi, Graziella & Bozzano, Monica, 2016. "Women, medieval commerce, and the education gender gap," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 496-521.
    2. Vincenzo Galasso & Paola Profeta, 2013. "From Family Culture to Welfare State Design," CHILD Working Papers Series 14, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    3. repec:eee:jcecon:v:46:y:2018:i:2:p:457-479 is not listed on IDEAS
    4. Graziella Bertocchi & Monica Bozzano, 2015. "Family Structure and the Education Gender Gap: Evidence from Italian Provinces," CESifo Economic Studies, CESifo, vol. 61(1), pages 263-300.
    5. repec:eee:eecrev:v:100:y:2017:i:c:p:236-256 is not listed on IDEAS
    6. Elsayyad, May & Konrad, Kai A., 2012. "Fighting multiple tax havens," Journal of International Economics, Elsevier, vol. 86(2), pages 295-305.
    7. Bozzano, Monica, 2017. "On the historical roots of women's empowerment across Italian provinces: religion or family culture?," European Journal of Political Economy, Elsevier, vol. 49(C), pages 24-46.
    8. Alesina, Alberto & Giuliano, Paola, 2014. "Family Ties," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 177-215 Elsevier.
    9. Bertocchi, Graziella & Bozzano, Monica, 2016. "Origins and implications of family structure across Italian provinces in historical perspective," CEPR Discussion Papers 11617, C.E.P.R. Discussion Papers.
    10. Barnett, Richard C. & Bhattacharya, Joydeep & Puhakka, Mikko, 2012. "Private versus public old-age security," Staff General Research Papers Archive 35442, Iowa State University, Department of Economics.
    11. repec:mod:depeco:0007 is not listed on IDEAS
    12. Mahsa Akbari & Duman Bahrami-Rad & Erik O. Kimbrough, 2017. "Kinship, Fractionalization and Corruption," Discussion Papers dp17-17, Department of Economics, Simon Fraser University.
    13. Alberto Alesina & Yann Algan & Pierre Cahuc & Paola Giuliano, 2015. "Family Values And The Regulation Of Labor," Journal of the European Economic Association, European Economic Association, vol. 13(4), pages 599-630, August.
    14. A. Alesina & P. Giuliano., 2016. "Culture and institutions," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 10.
    15. Luca Crivelli & Paola Salari, 2012. "Fiscal federalism and income redistribution through healthcare financing: An empirical analysis for the Swiss cantons," CEPRA working paper 1204, USI Università della Svizzera italiana.
    16. Graziella Bertocchi & Monica Bozzano, 2016. "Origins and implications of family structure across Italian provinces in historical perspective," Department of Economics 0095, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    17. repec:hrv:faseco:34330186 is not listed on IDEAS
    18. Ang, James B. & Fredriksson, Per G., 2017. "Wheat agriculture and family ties," European Economic Review, Elsevier, vol. 100(C), pages 236-256.
    19. repec:taf:jdevst:v:52:y:2016:i:6:p:813-823 is not listed on IDEAS
    20. repec:spr:jopoec:v:31:y:2018:i:3:d:10.1007_s00148-017-0681-9 is not listed on IDEAS

    More about this item

    Keywords

    culture; family ties; pension design;

    JEL classification:

    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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