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Poverty Among the Elderly: The Role of Public Pension Systems

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  • Philippe Jacques
  • Marie-Louise Leroux
  • Dalibor Stevanovic

Abstract

The objective of this paper is to measure the impact of first-pillar public pensions spending on the prevalence of poverty among the elderly. Using data from 27 European countries from 1995 to 2014, we estimate the elasticity of the poverty rate among individuals aged over 65 years to per capita public pension spending. We show the existence of a nonlinear relationship between these two variables. The elasticity is negative and statistically different from 0 only beyond a level of spending of 685 Euro per capita. At the average value of 2,819 Euro, it is estimated that the elasticity is about -1.45. This nonlinear relation is robust to the treatment of possible endogeneity and to different robustness checks like the variation of the poverty line, and the inclusion of country-specific differences in public pension plans.

Suggested Citation

  • Philippe Jacques & Marie-Louise Leroux & Dalibor Stevanovic, 2018. "Poverty Among the Elderly: The Role of Public Pension Systems," Cahiers de recherche 1807, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    • Handle: RePEc:lvl:criacr:1807
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    1. Mathieu Lefèbvre & Pierre Pestieau, 2006. "The generosity of the welfare state towards the elderly," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(5), pages 351-360, December.
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    4. Timothy Smeeding & James Williamson, 2001. "Income Maintenance in Old Age: What Can be Learned from Cross-National Comparisons," LIS Working papers 263, LIS Cross-National Data Center in Luxembourg.
    5. Marchand, J. & Smeeding, T., 2016. "Poverty and Aging," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 905-950, Elsevier.
      • Marchand, Joseph & Smeeding, Timothy, 2016. "Poverty and Aging," Working Papers 2016-11, University of Alberta, Department of Economics, revised 20 Nov 2016.
    6. Mathieu Lefèbvre & Pierre Pestieau & Gregory Ponthiere, 2018. "FGT Old†Age Poverty Measures and the Mortality Paradox: Theory and Evidence," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(2), pages 428-458, June.
    7. Kevin Milligan, 2008. "The Evolution of Elderly Poverty in Canada," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 79-94, November.
    8. Gary V. Engelhardt & Jonathan Gruber, 2004. "Social Security and the Evolution of Elderly Poverty," NBER Working Papers 10466, National Bureau of Economic Research, Inc.
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    10. Mitchell A. Orenstein, 2011. "Pension privatization in crisis: Death or rebirth of a global policy trend?," International Social Security Review, John Wiley & Sons, vol. 64(3), pages 65-80, July.
    11. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
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    Cited by:

    1. Rajko Tomaš, 2022. "Measurement of the Concentration of Potential Quality of Life in Local Communities," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(1), pages 79-109, August.
    2. Yoko Niimi & Charles Yuji Horioka, 2023. "Elderly poverty and its measurement," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 29, pages 307-315, Edward Elgar Publishing.

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    More about this item

    Keywords

    Ageing; Poverty; Income Inequalities; Public Pension Systems; Panel Data;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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