The Within-system Redistribution of Contributory Pensions Systems: a Conceptual Framework and Empirical Method of Estimation

Carlos Grushka
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Carlos Grushka: Universidad de Buenos Aires

No 91, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: When discussing the distributional impacts of pension systems, the difference between the underlying rationale for considering them as tax-transfers or deferred wage schemes is critical. The way that benefits are determined (usually with decreasing replacement rates by income level) plays a significant role to determine within-system redistribution. However, to evaluate the overall effective redistribution it is crucial to incorporate the effects of coverage or “selectivity”, and the funding or financing of the benefits under payment. The within-system redistribution is highly affected by the changing rules along time, the specific ways that they apply in each country, the different approaches for data definition (on revenue, expenditure, and coverage) and data availability. After analyzing in detail the case of Argentina and all the variables involved, we propose a simplified redistribution index, defined as the difference of gross substitution rates by education levels (proxy of lifetime income). This index can be estimated from cross-sectional income surveys and works as an excellent complement--or as a reasonable proxy--for the extent of redistribution within contributory pensions systems in different countries and periods.

Keywords: social security and public pensions; personal income distribution; economics of the elderly; Argentina (search for similar items in EconPapers)
JEL-codes: D31 H50 H55 J14 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-11
New Economics Papers: this item is included in nep-age and nep-pbe
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Published in Commitment to Equity, November 2019, pages 1-26

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http://repec.tulane.edu/RePEc/ceq/ceq91.pdf First version, 2019 (application/pdf)

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