Macroeffects of combined indexation

András Simonovits
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András Simonovits: Hungarian Academy of Scientists

Chapter Chapter 14 in Modeling Pension Systems, 2003, pp 139-143 from Palgrave Macmillan

Abstract: Abstract The indexation of benefits to wages has attractive features (see Chapter 4 above). There is an international trend, however, to replace wage indexation with price indexation or, as a compromise, with combined wage and price indexation (compare the Hungarian pension reform in Chapters 4, 9 and 18). In this Chapter, we shall show that this change yields only a temporary slow-down in the growth of total pension expenditures, and results in a step-by-step permanent relative deprivation of the older cohorts vis-a-vis workers. (Janos Reti called my attention to this apparently overlooked phenomenon and I express my gratitude to him here.)

Date: 2003
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DOI: 10.1057/9780230597693_15

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