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Social Insurance Based on Personal Savings

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  • STEFAN FÖLSTER

Abstract

Many countries have reformed, or plan to reform, their pension system. The trend is to move from an entitlement based system to a system in which contributions accumulate in some form of personal savings account. In recent years proposals have been made to apply a personal savings account also to other elements of social insurance, such as unemployment insurance, social assistance, health care costs and others. This paper presents a simple model and a simulation to compare the lifetime consequences of replacing a wide range of social insurance systems with savings account based social insurance. The results indicate that savings account based social insurance can be designed to provide the same economic security as offered by a generous welfare state, and yet lower marginal taxes considerably.

Suggested Citation

  • Stefan Fölster, 1999. "Social Insurance Based on Personal Savings," The Economic Record, The Economic Society of Australia, vol. 75(1), pages 5-18, March.
    • Handle: RePEc:bla:ecorec:v:75:y:1999:i:1:p:5-18
    DOI: 10.1111/j.1475-4932.1999.tb02429.x
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    References listed on IDEAS

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    1. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
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    Cited by:

    1. Stiglitz, Joseph E. & Yun, Jungyoll, 2005. "Integration of unemployment insurance with retirement insurance," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2037-2067, December.
    2. Lindbeck, Assar, 2001. "Changing Tides for the Welfare State - An Essay," Working Paper Series 550, Research Institute of Industrial Economics.
    3. Milan Vodopivec, 2013. "Introducing unemployment insurance to developing countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    4. Assar Lindbeck, 2002. "Pensions and Contemporary Socioeconomic Change," NBER Chapters, in: Social Security Pension Reform in Europe, pages 19-48, National Bureau of Economic Research, Inc.
    5. Daniele Franco, 2002. "Italy: A Never-Ending Pension Reform," NBER Chapters, in: Social Security Pension Reform in Europe, pages 211-262, National Bureau of Economic Research, Inc.
    6. Sasmita Mishra & Damodar Suar, 2007. "Do Lessons People Learn Determine Disaster Cognition and Preparedness?," Psychology and Developing Societies, , vol. 19(2), pages 143-159, December.
    7. Hartley, Gonzalo Reyes & van Ours, Jan C. & Vodopivec, Milan, 2011. "Incentive effects of unemployment insurance savings accounts: Evidence from Chile," Labour Economics, Elsevier, vol. 18(6), pages 798-809.
    8. Barrientos, Armando, 2002. "Women, Informal Employment, and Social Protection in Latin America," General Discussion Papers 30557, University of Manchester, Institute for Development Policy and Management (IDPM).

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