Redistributive pensions in the developing world

Achim Kemmerling and Michael Neugart

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: Redistributive so-called social pension schemes have seen a remarkable surge in developing countries. These schemes often target the rural elderly and correlate with urbanization rates, urban rural-wage differentials, and family norms. We use this stylized evidence to motivate a political economy model for a Beveridgean pension system with trade-offs between four groups: the (poorer) rural old and young, and the (richer) urban old and young. We show under which conditions governments will install a pension system and increase its generosity as the share of the urban population rises, productivity differentials between urban and rural workers widen, or the social norm erodes. Our conclusion is that the role of the rural–urban divide in shaping redistribution merits more scholarly attention, as the gap between cities and the countryside widens in many developing countries.

Date: 2024-06-24
New Economics Papers: this item is included in nep-age, nep-pbe and nep-ure
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Published in Review of Development Economics 2 (2024-06-24)

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https://tuprints.ulb.tu-darmstadt.de/27441
https://doi.org/10.1111/rode.12582

Related works:
Journal Article: Redistributive pensions in the developing world (2019)
Working Paper: Redistributive pensions in the developing world (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:146282

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