The Choice between Pension Reform Options

Tilburg University, Center for Economic Research Discussion Paper Series No. 1998-9

Posted: 7 Jan 1999

See all articles by Monika Butler

Monika Butler

University of St. Gallen; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 1998

Abstract

We evaluate the likelihood of different reforms of an unsustainable pay-as-you-go pension system. Individual agents' preferences are determined for 15 age groups and all possible levels of wealth to account for expectations held prior to a reform. Moreover, we introduce "indifference bands" in an age-savings plane to assess the robustness of our findings. Majority votes tend to favour distortionary tax increases over benefit reductions. Tax-benefit linkages and especially altruistic preferences can lead to more efficient voting outcomes. Although wealth holdings is a crucial variable in determining individual preferences, the ranking of reforms is generally not affected.

JEL Classification: H55, D91, D72

Suggested Citation

Bütler, Monika, The Choice between Pension Reform Options (1998). Tilburg University, Center for Economic Research Discussion Paper Series No. 1998-9, Available at SSRN: https://ssrn.com/abstract=138141

Monika Bütler (Contact Author)

University of St. Gallen ( email )

Varnbuelstr. 14
Saint Gallen, St. Gallen CH-9000
Switzerland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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