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A Simulation of Social Pensions in Europe

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  • Vandeninden, Frieda

    () (UNU-MERIT, MGSoG, Maastricht University and Center of Research in Public Economics and Population Economics, Université de Liège)

Abstract

The aim of this paper is to evaluate the impact in terms of poverty and cost of the introduction of social (or non-contributory) pensions in Europe. We use data from the household survey EU-SILC and focus on 17 countries. We simulate - in a static framework - the introduction of two social pension schemes: universal and means tested social pensions. We see that the old-age poverty would substantially decrease (average poverty rate goes from 19.7 to 2.5 per cent with the universal scheme) but not totally, even though the level of the universal pension is set up to the poverty line. The impact on poverty with the means tested social pension is quite similar (though always smaller) than the one with the universal pension, since most elderly have few other income sources than pensions. On the opposite, it costs less. In fact, the means test reduces substantially the number of entitled elderly while the universal pension leads to a 'leakage' to non-poor elderly.

Suggested Citation

  • Vandeninden, Frieda, 2012. "A Simulation of Social Pensions in Europe," MERIT Working Papers 008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2012008
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    File URL: https://www.merit.unu.edu/publications/wppdf/2012/wp2012-008.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    old age; poverty; pension systems; social pensions; pensions;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D19 - Microeconomics - - Household Behavior - - - Other
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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