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Trade And Pension Systems

Author

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  • Bartholomae, Florian W.

Abstract

This article concentrates on the possible relationship between trade and pension systems. I consider trade between a capital-abundant home and a labor-abundant foreign country. The underlying model is a two-period overlapping generations-model augmented with factor-price changes resulting from price-variations through globalization. First, I analyze the resulting income effects of the young generation and of the retirees in a pay-as-you-go (PAYG) pension system and a fully funded pension system. Considering contribution rates and population growth, the retirees might improve their income situation in a fully funded system. Second, I analyze the effects on life income when a pension system change is implemented simultaneous with the reduction of trade barriers. A less expensive change can be expected, if free trade is permitted.

Suggested Citation

  • Bartholomae, Florian W., 2006. "Trade And Pension Systems," Working Papers in Economics 2006,1, Bundeswehr University Munich, Economic Research Group.
  • Handle: RePEc:zbw:ubwwpe:20061
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    File URL: https://www.econstor.eu/bitstream/10419/23030/1/2006-1Bartholomae.pdf
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    References listed on IDEAS

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    1. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    2. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    3. Hans-Werner Sinn, 1999. "Pension Reform and Demographic Crisis: Why a Funded System is Needed and why it is not Needed," CESifo Working Paper Series 195, CESifo Group Munich.
    4. Browning, Edgar K, 1975. "Why the Social Insurance Budget Is Too Large in a Democracy," Economic Inquiry, Western Economic Association International, vol. 13(3), pages 373-388, September.
    5. Wellisch, Dietmar & Walz, Uwe, 1998. "Why do rich countries prefer free trade over free migration? The role of the modern welfare state," European Economic Review, Elsevier, vol. 42(8), pages 1595-1612, September.
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    Cited by:

    1. Sell, Friedrich L., 2007. "More about economic and non-economic determinants of (mutual) trust and trustworthiness," Working Papers in Economics 2007,2, Bundeswehr University Munich, Economic Research Group.

    More about this item

    Keywords

    Umlageverfahren; Kapitalgedecktes Rentensystem; Heckscher-Ohlin-Samuelson; Handel mit Niedrig-Lohn-Ländern; Pay-as-you-go pension system; fully funded pension system; Heckscher-Ohlin-Samuelson; trade with low-wage-countries;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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