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On the impact of indexation and demographic ageing on inequality among pensioners

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Abstract

Possible future trends in the development of pension adequacy are usually simulated using dynamic microsimulation models. These models are very complex and include many different processes. This, and the many individual interactions, makes it difficult to see which procedures and relations underlie the observed simulation results. Hence, the discussion of simulation results, and especially trends, tend to be based on ‘common sense reasoning’ using only a few fundamental parameters. If this strategy to explain the simulation results from a dynamic MSM is valid, then a simple stylized model describing these fundamental relations should be able to capture the long-term trends in inequality among pensioners. The results of the stylized model could then be comparable to those of a dynamic microsimulaton model. This strategy also allows to validate dynamic microsimulation models. This paper uses such a simple model to show some general relations between indexation, retirement age, demographic ageing and the inequality of pensions. The results of this stylized model are then compared to simulation results of a dynamic MSM, in this case MIDAS Belgium.

Suggested Citation

  • Dekkers, Gijs, 2010. "On the impact of indexation and demographic ageing on inequality among pensioners," MPRA Paper 36136, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36136
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    File URL: https://mpra.ub.uni-muenchen.de/36136/1/MPRA_paper_36136.pdf
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    Cited by:

    1. Li, Jinjing & O'Donoghue, Cathal, 2012. "A methodological survey of dynamic microsimulation models," MERIT Working Papers 002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Jinjing Li & Cathal O'Donoghue, 2013. "A survey of dynamic microsimulation models: uses, model structure and methodology," International Journal of Microsimulation, International Microsimulation Association, vol. 6(2), pages 3-55.

    More about this item

    Keywords

    microsimulation; ageing; social hypotheses; poverty; inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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