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Public Sector Pension Policies and Capital Accumulation in Emerging Economies


  • Gerhard Glomm

    () (Department of Economics, Indiana University, Bloomington)

  • Juergen Jung

    () (Department of Economics, Towson University)

  • Changmin Lee

    () (Department of Economics, Indiana University, Bloomington)

  • Chung Tran

    () (School of Economics, University of New South Wales)


In many emerging economies pension programs of public sector workers are more generous than pension programs of private sector workers. In this paper we investigate public pension reforms that improve efficiency and welfare by reallocating government resources from non-productive public pensions to productive public education and infrastructure investments. We argue that the opportunity costs of running generous public pension schemes for civil servants are potentially large in emerging economies that often suffer from low public investments in education and infrastructure. In addition, we quantitfy the savings distortions as well as the tax distortions from running a generous public pension program. Calculating transitions to the post-reform steady state, we find that welfare losses for the generation born before the reform are offset by welfare gains by the generations born after the reform.

Suggested Citation

  • Gerhard Glomm & Juergen Jung & Changmin Lee & Chung Tran, 2009. "Public Sector Pension Policies and Capital Accumulation in Emerging Economies," Discussion Papers 2009-10, School of Economics, The University of New South Wales.
  • Handle: RePEc:swe:wpaper:2009-10

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    References listed on IDEAS

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    Blog mentions

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    1. Public pensions vs. public investment
      by Economic Logician in Economic Logic on 2009-08-06 19:33:00


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    Cited by:

    1. Gerhard Glomm & Juergen Jung, 2015. "A Macroeconomic Analysis Of Energy Subsidies In A Small Open Economy," Economic Inquiry, Western Economic Association International, vol. 53(4), pages 1783-1806, October.
    2. Gerhard Glomm & Juergen Jung, 2010. "A Macroeconomic Analysis of the Fiscal System in Egypt," Working Papers 2010-17, Towson University, Department of Economics, revised Oct 2010.

    More about this item


    Social Security Reform; Generous Public Sector Pensions; Capital Accumulation; Public Education and Infrastructure Investments;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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