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What Social Security: Beveridgean or Bismarckian?

Author

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  • J. Ignacio Conde-Ruiz
  • Paola Profeta

Abstract

Bismarckian social security systems are associated with larger public pension expenditures, a smaller fraction of private pension and lower income inequality than Beveridgean systems. This paper introduces a bidimensional voting model to account for all these features. Agents differ in age, income and in their ability to invest in the capital market. The voting game determines the degree of redistribution of the social security system -Bismarckian or Beveridgean- and the size of the transfer (for the low-income retirees). In an economy with three income groups, a small Beveridgean system is supported by low-income agents, who gain from its redistributive feature, and high-income individuals, who seek to minimize their tax contribution and to invest their resources in a private scheme. Middle- income individuals favor a large earning-related (Bismarckian) system. Hence, large (small) inequality is associated with a small Beveridgean (large Bismarckian) system and a large (small) private system.

Suggested Citation

  • J. Ignacio Conde-Ruiz & Paola Profeta, "undated". "What Social Security: Beveridgean or Bismarckian?," Working Papers 2003-16, FEDEA.
    • Handle: RePEc:fda:fdaddt:2003-16
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gautier, Axel & Wauthy, Xavier, 2012. "Competitively neutral universal service obligations," Information Economics and Policy, Elsevier, vol. 24(3), pages 254-261.
    2. Frieda Vandeninden, 2010. "Social Pensions in Europe: The Aim, The Impact and The Cost," CREPP Working Papers 1007, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    3. Vincenzo Galasso & Paola Profeta, 2004. "Lessons for an ageing society: the political sustainability of social security systems [‘Assessing dynamic efficiency: theory and evidence’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(38), pages 64-115.
    4. Alessandro Sommacal, 2006. "Pension systems and intragenenerational redistribution when labor supply is endogenous," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 379-406, July.
    5. Vandeninden, Frieda, 2012. "A Simulation of Social Pensions in Europe," MERIT Working Papers 2012-008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Juan Prieto & Juan Gabriel Rodríguez & Rafael Salas, "undated". "Polarization, Inequality and Tax Reforms," Working Papers 2003-23, FEDEA.
    7. Rainald Borck, 2007. "On the Choice of Public Pensions when Income and Life Expectancy Are Correlated," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(4), pages 711-725, August.
    8. Ke Meng & Shouhao Li, 2023. "Welfare Regimes and Intergenerational Social Mobility: An Institutional Explanation of the Great Gatsby Curve," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(1), pages 355-375, January.
    9. Mathieu Lefèbvre, 2007. "The Redistributive Effects of Pension Systems in Europe: A Survey of Evidence," LIS Working papers 457, LIS Cross-National Data Center in Luxembourg.
    10. Rossignol, Stephane & Taugourdeau, Emmanuelle, 2004. "Social insurance with representative democracy," Economics Letters, Elsevier, vol. 82(1), pages 127-134, January.
    11. Dariusz Stanko, 2004. "Social Security in Theory and Practice: An Essay," Public Economics 0401007, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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