Assessing Welfare Accounts
Confederation of Swedish Enterprise; Swedish Research Institute of Trade (HUI)
Swedish Research Institute of Trade (HUI)
J. Michael Orszag
Towers Watson - Reigate (Surrey Office); Institute for the Study of Labor (IZA)
Dennis J. Snower
University of Kiel - Institute for World Economics (IfW); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
CEPR Discussion Paper No. 3479
The paper examines the possible effects of introducing a large-scale welfare reform in Sweden, namely, the introduction of comprehensive welfare accounts. Under this policy, individuals make mandatory contributions to accounts, which they can top up with voluntary contributions. In return, individuals' welfare benefits are paid from their accounts. The paper uses a large panel of individual income data to examine how the adoption of universal welfare accounts may affect economic activity. We find that this policy could be designed so as to reduce social insurance expenditure considerably, improve the incentives to work and save, all with relatively small redistributive impact.
Number of Pages in PDF File: 30
Keywords: Welfare reform, welfare accounts, social insurance, taxes, welfare state benefits
JEL Classification: H11, H21, H23, H51, H52, H53, H55working papers series
Date posted: September 14, 2002
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