Crisis and Pension System Design in the EU: Intergenerational Redistribution and International Spillover Effects Via Factor Mobility

22 Pages Posted: 25 Nov 2011

See all articles by Igor Fedotenkov

Igor Fedotenkov

Tilburg University

A. C. Meijdam

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics

Date Written: September 1, 2011

Abstract

Many EU states have adjusted pension benefits or reformed the pension system in reaction to the recent economic crisis, while other member states have postponed this type of adjustments. In this paper we analyse the welfare effects of these different reactions to the crisis in an economic union. We show that flexible pension schemes spread the burden of the crisis more evenly over various generations. As production factors are mobile within an economic union, differences in pension adjustments lead to international spillover effects. In particular, countries that respond quickly to the crisis may be harmed by the lingering in other member states. We show that the extent to which this is the case depends crucially on the degree of labour mobility in the short run.

Suggested Citation

Fedotenkov, Igor and Meijdam, A.C. (Lex), Crisis and Pension System Design in the EU: Intergenerational Redistribution and International Spillover Effects Via Factor Mobility (September 1, 2011). Netspar Discussion Paper No. 09/2011-090. Available at SSRN: https://ssrn.com/abstract=1964639 or http://dx.doi.org/10.2139/ssrn.1964639

Igor Fedotenkov (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

A.C. (Lex) Meijdam

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 23 85 (Phone)
+31 13 466 30 42 (Fax)

Tilburg University - Department of Economics

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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