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Sustainability of the Slovenian Pension System: An Analysis with an Overlapping-Generations General Equilibrium Model

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  • Miroslav VerbiÄ
  • Boris Majcen
  • Renger Van Nieuwkoop

Abstract

This paper uses a dynamic overlapping-generations (OLG) general equilibrium model to analyze welfare effects in Slovenia, the macroeconomic effects of the Slovenian pension reform, and the effects of the pension fund deficit on the sustainability of Slovenian public finances. Although young and new generations will lose from the pension reform, even complete implementation of reforms might not sufficiently compensate for unfavorable demographic developments. The level of expected deficit for the pay-as-you-go state pension fund seems to be most worrying. Financing the pension system with value-added tax revenues, as an extreme case, could result in more sustainable public finances, because gross domestic product and welfare levels ought to increase; however, this might be infea-sible to implement politically, given that generations of voters would have their welfare decreased. In addition, the present pension system is opaque and tremendously complicated and primarily, should be made more comprehensible to the public.

Suggested Citation

  • Miroslav VerbiÄ & Boris Majcen & Renger Van Nieuwkoop, 2006. "Sustainability of the Slovenian Pension System: An Analysis with an Overlapping-Generations General Equilibrium Model," Eastern European Economics, Taylor & Francis Journals, vol. 44(4), pages 60-81, August.
    • Handle: RePEc:mes:eaeuec:v:44:y:2006:i:4:p:60-81
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    Citations

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    Cited by:

    1. Robert Holzmann & Landis MacKellar & Jana Repansek, 2009. "Pension Reform in Southeastern Europe : Linking to Labor and Financial Market Reforms," World Bank Publications - Books, The World Bank Group, number 2587.
    2. Miroslav Verbic, 2007. "Varying the Parameters of the Slovenian Pension System: an Analysis with an Overlapping-Generations General Equilibrium Model," Post-Communist Economies, Taylor & Francis Journals, vol. 19(4), pages 449-470.
    3. Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2017. "Welfare effects of fiscal policy in reforming the pension system," GRAPE Working Papers 11, GRAPE Group for Research in Applied Economics.
    4. Miroslav Verbic, 2005. "A Quarterly Econometric Model of the Slovenian Economy," Econometrics 0511015, University Library of Munich, Germany.
    5. Verbic, Miroslav, 2007. "Modelling the pension system in an overlapping-generations general equilibrium modelling framework," MPRA Paper 10350, University Library of Munich, Germany.
    6. Joze Sambt & Janez Malačič, 2011. "Slovenia: independence and the return to the family of European market economies," Chapters, in: Ronald Lee & Andrew Mason (ed.), Population Aging and the Generational Economy, chapter 17, Edward Elgar Publishing.
    7. Sašo Polanec & Aleš Ahčan & Miroslav Verbič, 2013. "Retirement decisions in transition: microeconometric evidence from Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 25(1), pages 99-118, March.
    8. Jan Hagemejer & Krzysztof Makarski & Joanna Tyrowicz, 2013. "Efficiency of the pension reform: the welfare effects of various fiscal closures," Working Papers 2013-23, Faculty of Economic Sciences, University of Warsaw.
    9. Miroslav Verbič & Boris Majcen & Olga Ivanova & Mitja Čok, 2011. "R&D and Economic Growth in Slovenia: A Dynamic General Equilibrium Approach with Endogenous Growth," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(1), pages 67-89, March.
    10. Robert Holzmann & Ufuk Guven, 2009. "Adequacy of Retirement Income after Pension Reforms in Central, Eastern, and Southern Europe : Eight Country Studies," World Bank Publications - Books, The World Bank Group, number 2610.
    11. Velma Pijalovic & Lejla Lazovic-Pita & Almir Pestek, 2018. "The analysis of perceptions and attitudes related to ageing in the Federation of Bosnia and Herzegovina," Public Sector Economics, Institute of Public Finance, vol. 42(3), pages 255-278.
    12. Verbic, Miroslav, 2007. "Supplementary pension insurance in Slovenia: an analysis with an overlapping-generations general equilibrium model," MPRA Paper 10352, University Library of Munich, Germany.
    13. Miroslav Verbic, 2008. "The Ageing Population and the Associated Challenges of the Slovenian Pension System," Financial Theory and Practice, Institute of Public Finance, vol. 32(3), pages 321-338.
    14. Makarski, Krzysztof & Tyrowicz, Joanna & Komada, Oliwia, 2021. "Efficiency versus Insurance: Capital Income Taxation and Privatizing Social Security," IZA Discussion Papers 14805, Institute of Labor Economics (IZA).
    15. Pu Liao & Hui Su & Dragan Pamučar, 2020. "Will Ending the One-Child Policy and Raising the Retirement Age Enhance the Sustainability of China’s Basic Pension System?," Sustainability, MDPI, vol. 12(19), pages 1-20, October.

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    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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