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The distributional effects of the pension system reform in Poland

Author

Listed:
  • Jarocinska Elena

    (CASE – Center for Social and Economic Research, Warsaw, Poland)

  • Ruzik-Sierdzińska Anna

    (Department of Economics I, Collegium of Economic Analysis, Warsaw School of Economics, Warsaw, Poland and CASE – Center for Social and Economic Research, Warsaw, Poland)

Abstract

This paper quantifies the effect of Poland's 1999 pension reform on the inequality of future pension benefits. The reform increases inequality, both in the upper and lower parts of the distribution. The estimates, based on the 2012 Polish Household Budget Survey, show that the Gini coefficient reaches 0.27 once the full effect of the reform has materialized. Had the pre-reform system continued unchanged, the Gini coefficient would not be >0.19. The increased inequality of pension benefits is the result of the system gradually moving from a more redistributive defined benefit pension system to a system in which benefits are strongly linked to earnings. We show to what extent minimum pension benefits mitigate the increase in inequality under different scenarios.

Suggested Citation

  • Jarocinska Elena & Ruzik-Sierdzińska Anna, 2023. "The distributional effects of the pension system reform in Poland," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 13(1), pages 1-21, January.
    • Handle: RePEc:vrs:izajlp:v:13:y:2023:i:1:p:21:n:2
    DOI: 10.2478/izajolp-2023-0002
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    References listed on IDEAS

    as
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    6. Auerbach, Alan J. & Lee, Ronald, 2011. "Welfare and generational equity in sustainable unfunded pension systems," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 16-27, February.
    7. Bielecki, Marcin & Goraus, Karolina & Hagemejer, Jan & Makarski, Krzysztof & Tyrowicz, Joanna, 2015. "Small assumptions (can) have a large bearing: evaluating pension system reforms with OLG models," Economic Modelling, Elsevier, vol. 48(C), pages 210-221.
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    More about this item

    Keywords

    pension; inequality; replacement rate; minimum pension; microsimulation;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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