IDEAS home Printed from https://ideas.repec.org/p/zbw/wgspdp/202001.html
   My bibliography  Save this paper

Measuring intra-generational redistribution in PAYG pension schemes

Author

Listed:
  • Klos, Jonas
  • Krieger, Tim
  • Stöwhase, Sven

Abstract

In this paper, we propose a novel index for measuring intra-generational redistribution in pay-as-you-go pension schemes. Our index solely requires information on contributions and pension benefits of retirees, enabling us to measure intra-generational redistribution isolated from possible inter-generational redistribution. We use contribution records of approx. 100,000 German individuals, who progressed into retirement in 2007-2015, to measure the level of intra-generational redistribution in the German statutory pension scheme (GRV). A recent reform of childcare benefit provision, which became effective in 2014, confirms the predictions of our index. The reform introduced additional benefits for a subgroup of substantial size of German mothers, due to which the index value for women, but not for men jumps up. Our findings suggests that GRV fulfils the ideal of a Bismarckian pension system without intra-generational redistribution for men, while women benefit from intra-generational redistribution.

Suggested Citation

  • Klos, Jonas & Krieger, Tim & Stöwhase, Sven, 2020. "Measuring intra-generational redistribution in PAYG pension schemes," Discussion Paper Series 2020-01, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
  • Handle: RePEc:zbw:wgspdp:202001
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/215692/1/1694154254.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bagchi, Shantanu, 2019. "Differential mortality and the progressivity of social security," Journal of Public Economics, Elsevier, vol. 177(C), pages 1-1.
    2. Tim Krieger & Thomas Lange, 2012. "Education, Life Expectancy and Pension Reform," Hacienda Pública Española / Review of Public Economics, IEF, vol. 202(3), pages 31-55, September.
    3. Valentino Dardanoni & Antonio Forcina, 1999. "Inference for Lorenz curve orderings," Econometrics Journal, Royal Economic Society, vol. 2(1), pages 49-75.
    4. Tim Krieger & Christine Meemann & Stefan Traub, 2022. "Inequality, Life Expectancy, and the Intragenerational Redistribution Puzzle - Some Experimental Evidence," CESifo Working Paper Series 9677, CESifo.
    5. Bommier, Antoine & Leroux, Marie-Louise & Lozachmeur, Jean-Marie, 2011. "On the public economics of annuities with differential mortality," Journal of Public Economics, Elsevier, vol. 95(7), pages 612-623.
    6. Tim Krieger & Stefan Traub, 2013. "The Bismarckian Factor," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(01), pages 64-66, April.
    7. Laurence J. Kotlikoff, 1998. "Simulating the Privatization of Social Security in General Equilibrium," NBER Chapters, in: Privatizing Social Security, pages 265-311, National Bureau of Economic Research, Inc.
    8. Peter Lambert & Xavier Ramos, 1997. "Horizontal Inequity and Vertical Redistribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(1), pages 25-37, January.
    9. Cremer, Helmuth & Pestieau, Pierre, 2003. "Social insurance competition between Bismarck and Beveridge," Journal of Urban Economics, Elsevier, vol. 54(1), pages 181-196, July.
    10. David Cutler & Angus Deaton & Adriana Lleras-Muney, 2006. "The Determinants of Mortality," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 97-120, Summer.
    11. J. Ignacio Conde-Ruiz & Paola Profeta, 2007. "The Redistributive Design of Social Security Systems," Economic Journal, Royal Economic Society, vol. 117(520), pages 686-712, April.
    12. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2000. "The Political Economy of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 503-522, September.
    13. Casamatta, Georges & Cremer, Helmuth & Pestieau, Pierre, 2000. "Political sustainability and the design of social insurance," Journal of Public Economics, Elsevier, vol. 75(3), pages 341-364, March.
    14. Gopi Shah Goda & John B. Shoven & Sita Nataraj Slavov, 2011. "Differential Mortality by Income and Social Security Progressivity," NBER Chapters, in: Explorations in the Economics of Aging, pages 189-204, National Bureau of Economic Research, Inc.
    15. Edin, P.-A. & Fredriksson, P., 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Papers 2000:19, Uppsala - Working Paper Series.
    16. Christian Seidl & Kirill Pogorelskiy & Stefan Traub, 2013. "Tax Progression in OECD Countries," Springer Books, Springer, edition 127, number 978-3-642-28317-8, June.
    17. Suits, Daniel B, 1977. "Measurement of Tax Progressivity," American Economic Review, American Economic Association, vol. 67(4), pages 747-752, September.
    18. Tim Krieger & Stefan Traub, 2013. "The Bismarckian Factor," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(1), pages 64-66, 04.
    19. Tim Krieger & Jens Ruhose, 2013. "Honey, I shrunk the kids’ benefits—revisiting intergenerational conflict in OECD countries," Public Choice, Springer, vol. 157(1), pages 115-143, October.
    20. Borsch-Supan, Axel & Reil-Held, Anette, 2001. " How Much Is Transfer and How Much Is Insurance in a Pay-As-You-Go System? The German Case," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 505-524, September.
    21. 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.
    22. Coronado Julia Lynn & Fullerton Don & Glass Thomas, 2011. "The Progressivity of Social Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-45, November.
    23. repec:ces:ifodic:v:11:y:2013:i:1:p:19078523 is not listed on IDEAS
    24. Tim Krieger & Stefan Traub, 2008. "Back to Bismarck? Shifting Preferences for Intragenerational Redistribution in OECD Pension Systems," Working Papers CIE 13, Paderborn University, CIE Center for International Economics.
    25. Mathieu Lefèbvre & Pierre Pestieau, 2006. "The generosity of the welfare state towards the elderly," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(5), pages 351-360, December.
    26. Bishnu, Monisankar & Guo, Nick L. & Kumru, Cagri S., 2019. "Social security with differential mortality," Journal of Macroeconomics, Elsevier, vol. 62(C).
    27. Axel Borsch‐Supan & Anette Reil‐Held, 2001. "How Much is Transfer and How Much is Insurance in a Pay‐as‐you‐go System? The German Case," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 505-524, September.
    28. Tim Krieger & Stefan Traub, 2009. "Wie hat sich die intragenerationale Umverteilung in der staatlichen Säule des Rentensystems verändert? Ein internationaler Vergleich auf Basis von LIS-Daten," Working Papers CIE 24, Paderborn University, CIE Center for International Economics.
    29. Davidson, Russell, 2009. "Reliable inference for the Gini index," Journal of Econometrics, Elsevier, vol. 150(1), pages 30-40, May.
    30. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
    31. Dennis Fredriksen & Nils M Stølen, 2017. "Life Time Pension Benefits Relative to Life Time Contributions," International Journal of Microsimulation, International Microsimulation Association, vol. 10(2), pages 177-207.
    32. Jenkins, Stephen, 1988. "Reranking and the Analysis of Income Redistribution," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(1), pages 65-76, February.
    33. Casamatta, Georges & Cremer, Helmuth & Pestieau, Pierre, 2000. " The Political Economy of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 503-522, June.
    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. Tim Krieger & Christine Meemann & Stefan Traub, 2022. "Inequality, Life Expectancy, and the Intragenerational Redistribution Puzzle - Some Experimental Evidence," CESifo Working Paper Series 9677, CESifo.

    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. Klos, Jonas & Krieger, Tim & Stöwhase, Sven, 2018. "A New Measure of Intra-generational Redistribution within PAYG Pension Schemes and its Application to German Micro-data," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181580, Verein für Socialpolitik / German Economic Association.
    2. Stefan Traub & Tim Krieger, 2008. "Back to Bismarck? Shifting Preferences for Intragenerational Redistribution in OECD Pension Systems," LIS Working papers 485, LIS Cross-National Data Center in Luxembourg.
    3. Tim Krieger & Christine Meemann & Stefan Traub, 2022. "Inequality, Life Expectancy, and the Intragenerational Redistribution Puzzle - Some Experimental Evidence," CESifo Working Paper Series 9677, CESifo.
    4. Stefan Traub & Tim Krieger, 2009. "Wie hat sich die intragenerationale Umverteilung in der staatlichen Säule des Rentensystems verändert? Ein internationaler Vergleich auf Basis von LIS-Daten," LIS Working papers 520, LIS Cross-National Data Center in Luxembourg.
    5. Tim Krieger & Thomas Lange, 2012. "Education, Life Expectancy and Pension Reform," Hacienda Pública Española / Review of Public Economics, IEF, vol. 202(3), pages 31-55, September.
    6. M.-L. Leroux & P. Pestieau, 2012. "The political economy of derived pension rights," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 753-776, October.
    7. Jorge Soares, 2012. "Social Security: Universal Versus Earnings-dependent Benefits," Economica, London School of Economics and Political Science, vol. 79(316), pages 611-640, October.
    8. Marko Koethenbuerger & Panu Poutvaara & Paola Profeta, 2008. "Why are more redistributive social security systems smaller? A median voter approach," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 275-292, April.
    9. Gustafsson, Johan, 2021. "Public Pension Reform and the Equity-Efficiency Trade-off," Umeå Economic Studies 992, Umeå University, Department of Economics.
    10. Daniel Montolio & Amedeo Piolatto & Luca Salvadori, 2022. "Financing public education when agents have retirement concerns," Economic Inquiry, Western Economic Association International, vol. 60(4), pages 1559-1580, October.
    11. Helmuth Cremer & Philippe Donder, 2016. "Life Expectancy Heterogeneity and the Political Support for Collective Annuities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(3), pages 594-615, July.
    12. Ryo Arawatari & Tetsuo Ono, 2011. "Old-age Social Security vs. Forward Intergenerational Public Goods Provision," Discussion Papers in Economics and Business 11-26-Rev.2, Osaka University, Graduate School of Economics, revised Aug 2013.
    13. Leroux, Marie-Louise & Pestieau, Pierre & Racionero, María, 2011. "Voting on pensions: Sex and marriage," European Journal of Political Economy, Elsevier, vol. 27(2), pages 281-296, June.
    14. Marco Magnani, 2020. "Precautionary retirement and precautionary saving," Journal of Economics, Springer, vol. 129(1), pages 49-77, January.
    15. Christophe Hachon, 2010. "Éducation et progressivité des systèmes de retraite. Quand les inégalités face à la mort comptent," Revue économique, Presses de Sciences-Po, vol. 61(4), pages 751-769.
    16. Sarah Brockhoff & Stéphane Rossignol & Emmanuelle Taugourdeau, 2012. "The three worlds of welfare capitalism revisited," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00679066, HAL.
    17. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2000. "The Political Economy of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 503-522, September.
    18. M.L. Leroux & P. Pestieau, 2014. "Social Security and Family Support," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 115-143, February.
    19. Tobias A. Jopp, 2011. "Old Times, Better Times? German Miners’ Knappschaften, Pay-as-you-go Pensions, and Implicit Rates of Return, 1854–1913," Ruhr Economic Papers 0238, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    20. Rivera-Rozo, J.A. (Jairo) & García-Huitrón, M.E. (Manuel) & Steenbeek, O.W. (Onno) & van der Lecq, S.G. (Fieke), 2018. "National culture and the configuration of public pensions," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 457-479.

    More about this item

    Keywords

    PAYG pension systems; intra-generational redistribution; Beveridge vs. Bismarck; index; microdata; Germany;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

    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:zbw:wgspdp:202001. See general information about how to correct material in RePEc.

    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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/wffrede.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.