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Wages and Pensions in the Future. How Much the Economy Can Afford (Place i emerytury w przyszlosci. Na ile stac gospodarke)

Andrzej Sopocko ()
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Andrzej Sopocko: Katedra Systemow Finansowych Gospodarki, Wydzial Zarzadzania Uniwersytetu Warszawskiego.

Research Reports, 2016, vol. 2, issue 21, 143-156

Abstract: Longer life seems to augment economic problems, and – above all – alarming opinions are being voiced about the burden of pension benefits that is imposed on the working population. Indeed, the relationship between those of the so-called working age and the elderly is getting worse. In statistical terms, this looks very unfavourable, yet a different impression may be gained when the issue is approached dynamically, that is with account being taken of the increase in labour productivity. The calculations presented in the article show that, by maintaining its long-term growth not only in Poland but also in other European countries, both real wages may increase and the current replacement rate (pension-wage relationship) can be sustained. More optimism about it could ensue if the current retirement age were maintained. The re-establishment of the previous (pre-2013) retirement age may, but need not, cause some problems such as freezing real net wages (due to growing social security contributions or alternative tax increases). Then, the current replacement rate probably could not be retained. In this article, the author describes the quantitative analysis intended to answer the question: with a realistically assumed labour productivity growth (over 1% per year), is it possible to maintain the current replacement rate and a simultaneous increase in real wages?

Keywords: income distribution; pension system; wages (search for similar items in EconPapers)
JEL-codes: G22 J26 J31 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:sgm:resrep:v:2:i:21:y:2016:p:143-156