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The Within-system Redistribution of Contributory Pensions Systems: a Conceptual Framework and Empirical Method of Estimation

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  • Carlos Grushka

    (Universidad de Buenos Aires)

Abstract

When discussing the distributional impacts of pension systems, the difference between the underlying rationale for considering them as tax-transfers or deferred wage schemes is critical. The way that benefits are determined (usually with decreasing replacement rates by income level) plays a significant role to determine within-system redistribution. However, to evaluate the overall effective redistribution it is crucial to incorporate the effects of coverage or “selectivity”, and the funding or financing of the benefits under payment. The within-system redistribution is highly affected by the changing rules along time, the specific ways that they apply in each country, the different approaches for data definition (on revenue, expenditure, and coverage) and data availability. After analyzing in detail the case of Argentina and all the variables involved, we propose a simplified redistribution index, defined as the difference of gross substitution rates by education levels (proxy of lifetime income). This index can be estimated from cross-sectional income surveys and works as an excellent complement--or as a reasonable proxy--for the extent of redistribution within contributory pensions systems in different countries and periods.

Suggested Citation

  • Carlos Grushka, 2019. "The Within-system Redistribution of Contributory Pensions Systems: a Conceptual Framework and Empirical Method of Estimation," Commitment to Equity (CEQ) Working Paper Series 91, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:91
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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq91.pdf
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    References listed on IDEAS

    as
    1. Thomas Barnay, 2007. "Redistributive Impact of Differential Mortality in the French Pay-As-You-Go System," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 32(4), pages 570-582, October.
    2. Graziella Caselli & Franco Peracchi & Elisabetta Barbi & Rosa Maria Lipsi, 2003. "Differential Mortality and the Design of the Italian System of Public Pensions," LABOUR, CEIS, vol. 17(s1), pages 45-78, August.
    3. Nicholas Barr & Peter Diamond, 2009. "Reforming pensions: Principles, analytical errors and policy directions," International Social Security Review, John Wiley & Sons, vol. 62(2), pages 5-29, April.
    4. Graziella Caselli & Franco Peracchi & Elisabetta Barbi & Rosa Maria Lipsi, 2003. "Differential Mortality and the Design of the Italian System of Public Pensions," LABOUR, CEIS, vol. 17(SpecialIs), pages 45-78, August.
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    More about this item

    Keywords

    social security and public pensions; personal income distribution; economics of the elderly; Argentina;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • 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

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