IDEAS home Printed from https://ideas.repec.org/p/war/wpaper/2013-26.html
   My bibliography  Save this paper

Unprivatizing the Pension System: The Case of Poland

Author

Listed:
  • Jan Hagemejer

    (National Bank of Poland; Faculty of Economic Sciences, University of Warsaw)

  • Krzysztof Makarski

    (National Bank of Poland; Warsaw School of Economics)

  • Joanna Tyrowicz

    (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)

Abstract

In many countries the fiscal tension associated with the global financial crisis brings about the discussion about unprivatizing the social security system. This paper employs an OLG model to assess ex ante the effects of such changes to the pension reform in Poland from 1999 as implemented in 2011 and proposed in 2013. We simulate the behavior of the economy without the implemented/proposed changes and compare it to a status quo defined by the reform from 1999. We find that the changes implemented in 2011 and all of the proposed reform scenarios from 2013 are detrimental to welfare. The effects on capital and output are small and depend on the selected fiscal closure. Implied effective replacement rates are lower. These findings are robust to time inconsistency. The shortsightedness of the governments imposes welfare costs.

Suggested Citation

  • Jan Hagemejer & Krzysztof Makarski & Joanna Tyrowicz, 2013. "Unprivatizing the Pension System: The Case of Poland," Working Papers 2013-26, Faculty of Economic Sciences, University of Warsaw.
  • Handle: RePEc:war:wpaper:2013-26
    as

    Download full text from publisher

    File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP111.pdf
    File Function: First version, 2013
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Borella, Margherita & Moscarola, Flavia Coda, 2010. "Microsimulation of pension reforms: behavioural versus nonbehavioural approach," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(4), pages 583-607, October.
    2. Vegard Skirbekk, 2004. "Age and Individual Productivity: A Literature Survey," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 2(1), pages 133-154.
    3. Shinichi Nishiyama & Kent Smetters, 2007. "Does Social Security Privatization Produce Efficiency Gains?," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1677-1719.
    4. Börsch-Supan, Axel & Weiss, Matthias, 2016. "Productivity and age: Evidence from work teams at the assembly line," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 30-42.
    5. Blake, David, 2000. "Does It Matter What Type of Pension Scheme You Have?," Economic Journal, Royal Economic Society, vol. 110(461), pages 46-81, February.
    6. Chlon, Agnieszka & Gora, Marek & Rutkowski, Michal, 1999. "Shaping pension reform in Poland : security through diversity," Social Protection Discussion Papers and Notes 20852, The World Bank.
    7. Marek Góra, 2013. "Political economy of pension reforms: selected general issues and the Polish pension reform case," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-31, December.
    8. Ayşe İmrohoroğlu & Selahattin İmrohoroğlu & Douglas H. Joines, 2003. "Time-Inconsistent Preferences and Social Security," The Quarterly Journal of Economics, Oxford University Press, vol. 118(2), pages 745-784.
    9. Gábor Orbán & Dániel Palotai, 2005. "The sustainability of the Hungarian pension system: a reassessment," MNB Occasional Papers 2005/40, Magyar Nemzeti Bank (Central Bank of Hungary).
    10. Jan Hagemejer & Krzysztof Makarski & Joanna Tyrowicz, 2013. "Efficiency of the pension reform: the welfare effects of various fiscal closures," Working Papers 2013-23, Faculty of Economic Sciences, University of Warsaw.
    11. Hans Fehr, 2009. "Computable Stochastic Equilibrium Models and Their Use in Pension- and Ageing Research," De Economist, Springer, vol. 157(4), pages 359-416, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aleksandra Kolasa, 2017. "Macroeconomic consequences of the demographic and educational transition in Poland," Working Papers 2017-30, Faculty of Economic Sciences, University of Warsaw.
    2. Beetsma, Roel & Komada, Oliwia & Makarski, Krzysztof & Tyrowicz, Joanna, 2021. "The political (in)stability of funded social security," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    3. Chybalski, Filip, 2018. "Intergenerational fairness from an economic perspective: Overview of some theoretical and methodological issues," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 14(2), February.
    4. Roel Beetsma & Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2020. "The political (in)stability of funded pension systems," Working Paper series 20-07, Rimini Centre for Economic Analysis.
    5. Manor Moshe & Ratajczak Joanna, 2020. "Shift to private pension system: The case of Poland and Israel," Economics and Business Review, Sciendo, vol. 6(1), pages 82-102, March.
    6. Krzysztof Makarski & Joanna Tyrowicz, 2015. "Political (In)Stability of Social Security Reform," Working Papers 2015-21, Faculty of Economic Sciences, University of Warsaw.
    7. Kompa, Krzysztof & Witkowska, Dorota, 2015. "Pension System in Poland: Performance of Pension Funds/El Sistema de Pensiones en Polonia: Rendimiento de los Fondos de Pensiones," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 33, pages 965-984, Septiembr.
    8. Krzysztof Kompa & Dorota Witkowska, 2014. "Pension Funds in Poland: Efficiency Analysis for Years 1999-2013," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 14, pages 105-124.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan Hagemejer & Krzysztof Makarski & Joanna Tyrowicz, 2013. "Efficiency of the pension reform: the welfare effects of various fiscal closures," Working Papers 2013-23, Faculty of Economic Sciences, University of Warsaw.
    2. Karolina Goraus & Krzysztof Makarski & Joanna Tyrowicz, 2014. "Does social security reform reduce gains from increasing the retirement age?," Working Papers 2014-03, Faculty of Economic Sciences, University of Warsaw.
    3. Joanna Tyrowicz & Krzysztof Makarski & Marcin Bielecki, 2016. "Reforming retirement age in DB and DC pension systems in an aging OLG economy with heterogenous agents," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-36, December.
    4. Bielecki, Marcin & Goraus, Karolina & Hagemejer, Jan & Tyrowicz, Joanna, 2016. "Decreasing fertility vs increasing longevity: Raising the retirement age in the context of ageing processes," Economic Modelling, Elsevier, vol. 52(PA), pages 125-143.
    5. Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2017. "Welfare effects of fiscal policy in reforming the pension system," GRAPE Working Papers 11, GRAPE Group for Research in Applied Economics.
    6. Jan Hagemejer & Marcin Bielecki & Karolina Goraus & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," EcoMod2014 6868, EcoMod.
    7. Bielecki, Marcin & Goraus, Karolina & Hagemejer, Jan & Makarski, Krzysztof & Tyrowicz, Joanna, 2015. "Small assumptions (can) have a large bearing: evaluating pension system reforms with OLG models," Economic Modelling, Elsevier, vol. 48(C), pages 210-221.
    8. Joanna Tyrowicz & Krzysztof Makarski & Marcin Bielecki, 2018. "Inequality in an OLG economy with heterogeneous cohorts and pension systems," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(4), pages 583-606, December.
    9. Börsch-Supan, A. & Härtl, K. & Leite, D.N., 2016. "Social Security and Public Insurance," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 781-863, Elsevier.
    10. Makarski, Krzysztof & Tyrowicz, Joanna, 2019. "On welfare effects of increasing retirement age," Journal of Policy Modeling, Elsevier, vol. 41(4), pages 718-746.
    11. Marcin Bielecki & Karolina Goraus & Jan Hagemejer & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," Working Papers 2014-12, Faculty of Economic Sciences, University of Warsaw.
    12. Joanna Tyrowicz & Krzysztof Makarski & Marcin Bielecki, 2018. "Inequality in an OLG economy with heterogeneous cohorts and pension systems," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(4), pages 583-606, December.
    13. Magda Malec, 2017. "Redystrybucja wewnątrzpokoleniowa w systemie emerytalnym," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 63-81.
    14. Krzysztof Makarski & Joanna Tyrowicz, 2015. "Political (In)Stability of Social Security Reform," Working Papers 2015-21, Faculty of Economic Sciences, University of Warsaw.
    15. Makarski, Krzysztof & Tyrowicz, Joanna & Komada, Oliwia, 2021. "Efficiency versus Insurance: Capital Income Taxation and Privatizing Social Security," IZA Discussion Papers 14805, Institute of Labor Economics (IZA).
    16. Pierre Pestieau & Gregory Ponthiere, 2017. "Optimal fertility under age-dependent labour productivity," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(2), pages 621-646, April.
    17. Andersen, Torben M. & Bhattacharya, Joydeep & Gestsson, Marias H., 2021. "Pareto-improving transition to fully funded pensions under myopia," Journal of Demographic Economics, Cambridge University Press, vol. 87(2), pages 169-212, June.
    18. Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2021. "Progressing towards efficiency: the role for labor tax progression in reforming social security," GRAPE Working Papers 57, GRAPE Group for Research in Applied Economics.
    19. Yoshihiko Kadoya & Mostafa Saidur Rahim Khan & Somtip Watanapongvanich & Punjapol Binnagan, 2020. "Emotional Status and Productivity: Evidence from the Special Economic Zone in Laos," Sustainability, MDPI, vol. 12(4), pages 1-15, February.
    20. Bagchi, Shantanu, 2015. "Labor supply and the optimality of Social Security," Journal of Economic Dynamics and Control, Elsevier, vol. 58(C), pages 167-185.

    More about this item

    Keywords

    OLG; PAYG; pension system reform; time inconsistency;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:war:wpaper:2013-26. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/fesuwpl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marcin Bąba (email available below). General contact details of provider: https://edirc.repec.org/data/fesuwpl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.