Measuring Intra-Generational Redistribution in PAYG Pension Schemes
25 Pages Posted: 15 Apr 2020
Date Written: 2020
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.
Keywords: PAYG pension systems, intra-generational redistribution, Beveridge vs. Bismarck, index, microdata, Germany
JEL Classification: H550, D310, C550
Suggested Citation: Suggested Citation