Social insurance competition between Bismarck and Beveridge

Helmuth Cremer and Pierre Pestieau

No 2001031, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The European Union consists of a wide variety of welfare states with social insurance schemes ranging from those providing earnings related benefits (Bismarckian) to fat rate benefits (Beveridgean) systems. The conventional wisdom is that with factor mobility poor people have incentives to move towards Beveridgean countries and rich individuals to move out of them. Consequently, Beveridgean regimes would not be sustainable; they would have to adapt or to perish. This paper studies the validity of such a conjecture within a simple model. It is shown that mobility does have a significant impact on social protection. However, the equilibrium patterns that can emerge are more complex and diversified than the initial conjecture suggests. In some cases, the equilibrium may even imply that all the poor move to the Bismarckian country.

Date: 2001-06
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Related works:
Journal Article: Social insurance competition between Bismarck and Beveridge (2003)
Working Paper: Social insurance competition between Bismarck and Beveridge (2003)
Working Paper: Social Insurance Competition between Bismark and Beveridge (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2001031

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