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Unprivatizing the Pension System: The Case of Poland

Author Info

Listed author(s):
  • 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.

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File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP111.pdf
File Function: First version, 2013
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Paper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number 2013-26.

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Length: 19 pages
Date of creation: 2013
Handle: RePEc:war:wpaper:2013-26
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Keywords: OLG; PAYG; pension system reform; time inconsistency;

Other versions of this item:

Find related papers by 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

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  1. Weiss, Matthias & Börsch-Supan, Axel, 2011. "Productivity and age: Evidence from work teams at the assembly line," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48719, Verein für Socialpolitik / German Economic Association.
  2. 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(04), pages 583-607, October.
  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. 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.
  5. Chlon, Agnieszka & Gora, Marek & Rutkowski, Michal, 1999. "Shaping pension reform in Poland : security through diversity," Social Protection and Labor Policy and Technical Notes 20852, The World Bank.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
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Cited by:

  1. 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.
  2. Krzysztof Makarski & Joanna Tyrowicz, 2015. "Political (In)Stability of Social Security Reform," Working Papers 2015-21, Faculty of Economic Sciences, University of Warsaw.
  3. 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 Economía Aplicada, Estudios de Economía Aplicada, vol. 33, pages 965-984, Septiembr.

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