Pensions and Distribution in an Ageing Society: A Non-Conventional View
Sergio Cesaratto ()
Chapter 8 in Wages, Employment, Distribution and Growth, 2006, pp 181-205 from Palgrave Macmillan
Abstract This chapter explores from a Classical point of view the economic impact of ageing with a particular concern for the future of Social Security organized along pay-as-you-go (PAYG) lines. Elsewhere I have shown the shortcomings of the two major pension reforms under discussion. Cesaratto (2002, 2005: chapter 2, 2006a) pointed out the pros and cons of the Notional Defined Contribution (NDC) reforms that, although in principle (and not without delay), provide the financial stability of PAYG, attain it in the most obvious way of cutting pension benefits, thus leaving aside the social sustainability of PAYG. Cesaratto (2002, 2005: chapters 3 and 4, 2006b) put forward the various shortcomings of the transition plans aimed at the creation of fully-funded (FF) schemes. Cesaratto (2005: chapter 6) showed that, according to the theory of effective demand, the welfare state, and PAYG in particular, are not necessarily detrimental to economic growth, in fact they may foster it. I also regarded the welfare state and PAYG as part of a Classical view of income distribution in which there is no natural distribution setting associated with factors’ full employment as in the Neoclassical theory. According to this view, it is the political opposition to changes in income distribution favourable to labour, rather than the Neoclassical mechanical association between distribution and output, that may determine a negative influence of social spending on growth.
Keywords: Labour Supply; Wage Rate; Labour Demand; Dependency Ratio; Ageing Society (search for similar items in EconPapers)
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