Pension Systems and Intragenerational Redistribution When Labor Supply is Endogenous

Econpubblica Working Paper No. 99

32 Pages Posted: 11 May 2004  

Alessandro Sommacal

Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales (IRES)

Date Written: April 2004

Abstract

It is usually thought that a Beveridgean pension system redistributes income more than a Bismarckian one, since it ensures replacement ratios that decrease with income. We check the validity of this result when the fact that pension systems can redistribute also through their effects on labor income is taken into account. Labor market institutions turn out to be crucial. First we study an economy with a competitive labor market: quite surprisingly, inequality is unaffected by a reallocation of funds towards the Beveridgean system. Then we introduce a minimum wage that creates unemployment on the unskilled labor market: in this case the Beveridgean system is proved to reduce inequality.

Keywords: Social Security, Intragenerational redistribution, Basic Pension, Beveridgean pension system, Bismarckian pension system

JEL Classification: H55

Suggested Citation

Sommacal, Alessandro, Pension Systems and Intragenerational Redistribution When Labor Supply is Endogenous (April 2004). Econpubblica Working Paper No. 99. Available at SSRN: https://ssrn.com/abstract=542422 or http://dx.doi.org/10.2139/ssrn.542422

Alessandro Sommacal (Contact Author)

Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales (IRES) ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium

Paper statistics

Downloads
72
Rank
262,769
Abstract Views
646