Measuring intra-generational redistribution in PAYG pension schemes

Jonas Klos (), Tim Krieger and Sven Stöwhase
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Jonas Klos: Bundesrechnungshof (German Supreme Audit Institution)

Public Choice, 2022, vol. 190, issue 1, No 3, 53-73

Abstract: Abstract Voters in ageing societies expect pension reforms to be both inter-generationally and intra-generationally fair. In this paper, we propose a global measure of intra-generational redistribution in pay-as-you-go pension schemes as a basis for voters’ evaluations of reforms. Our novel index only requires information on contributions by and pension benefits paid to retirees, enabling us to measure intra-generational redistribution isolated from possible inter-generational redistribution. We rely on the contribution records of approximately 100,000 Germans, who progressed into retirement in 2007–2015, to measure the level of intra-generational redistribution in the German statutory pension scheme (GRV). A recent reform of the childcare benefit provision, which became effective in 2014, confirms the predictions of our index. The reform introduced additional benefits for a substantial subgroup of German mothers, owing to which the index value for women, but not for men, jumps up. Our findings suggests that GRV fulfills the ideal of a Bismarckian pension system without intra-generational redistribution for men, while women benefit significantly from intra-generational redistribution.

Keywords: PAYG pension systems; Political support for reform; Intra-generational redistribution; Beveridge versus Bismarck; Index; Micro-data; Germany (search for similar items in EconPapers)
JEL-codes: C55 D31 H55 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Measuring Intra-Generational Redistribution in PAYG Pension Schemes (2020)
Working Paper: Measuring intra-generational redistribution in PAYG pension schemes (2020)
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DOI: 10.1007/s11127-021-00914-w

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