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Intergenerational Contracts and Time Consistency: Implications for Policy Settings and Governance in the Social Welfare System

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Abstract

In this paper we explore the question of the sustainability of the intergenerational contract that is represented by the current structure of social welfare. We argue that sustainability and time consistency of social welfare policies could be improved by more explicit recognition of the social welfare system as a relational contract that should be reinterpreted in the light of changes in technology, changes in our understanding of the incentive effects of different approaches to social welfare provision, and changes in society as a whole. We suggest that too much of our social welfare policy is based on approaches developed under the social and economic conditions and technology of the past, and that this is a key source of the potential challenge to the sustainability of current policies.

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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2013/13-25/twp13-25.pdf
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Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 13/25.

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Length: 34
Date of creation: Dec 2013
Handle: RePEc:nzt:nztwps:13/25
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Keywords: intergeneration; time consistency; relational contract; insurance; social welfare;

Find related papers by JEL classification:

  • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
  • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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