A Matter of Trust: Understanding Worldwide Public Pension Conversions
This paper seeks to explain the key two stylized facts of fundamental reforms to social security systems worldwide: Why have so many countries reformed when traditional systems seem, at first glance, to have a higher probability of delivering a secure retirement income? Why have these reforms been larger in developing countries facing less severe demographic problems? We show that an OLG voter model can answer both questions. Larger reforms are motivated by a fundamental breakdown in intergenerational trust while smaller reforms are caused by a lack of trust in the ability of the government to save. Empirical analysis seems to support the model.
|Date of creation:||May 2011|
|Date of revision:|
|Note:||AG PE POL|
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- Eduardo Walker & Fernando Lefort, 2002.
"Pension Reform And Capital Markets: Are There Any (Hard) Links?,"
Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 5(2), pages 77-149.
- Walker, Eduardo & Lefort, Fernando, 2002. "Pension reform and capital markets : are there any (hard) links?," Social Protection and Labor Policy and Technical Notes 24082, The World Bank.
- Douglas W. Elmendorf & Louise M. Sheiner, 2000. "Should America Save for Its Old Age? Fiscal Policy, Population Aging, and National Saving," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 57-74, Summer.
- Kent Smetters, 2004. "Is the Social Security Trust Fund a Store of Value?," American Economic Review, American Economic Association, vol. 94(2), pages 176-181, May.
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