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

Listed author(s):
  • Vincenzo Galasso

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

  • Paola Profeta

    ()

    (Econpubblica, Bocconi University, Milan)

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.

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File URL: http://doc.rero.ch/lm.php?url=1000,42,6,20120606155023-SD/CEPRA_01_2012.pdf
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Paper provided by USI Università della Svizzera italiana in its series CEPRA working paper with number 1201.

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Length: 57 pages
Date of creation: Jan 2012
Handle: RePEc:lug:wcepra:1201
Contact details of provider: Web page: https://www.bul.sbu.usi.ch

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  11. Marko Koethenbuerger & Panu Poutvaara & Paola Profeta, 2008. "Why are more redistributive social security systems smaller? A median voter approach," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 275-292, April.
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  18. Vincenzo Galasso & Roberta Gatti & Paola Profeta, 2009. "Investing for the old age: pensions, children and savings," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 538-559, August.
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  20. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, Diciembre.
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