Publication detail

European Pension Systems and the EU Enlargement

Author(s): doc. Ing. Ondřej Schneider MPhil., Ph.D.,
Type: IES Working Papers
Year: 2003
Number: 26
ISSN / ISBN:
Published in: IES WP 2003/26
Publishing place: Prague
Keywords: European integration, pension systems, labor mobility
JEL codes: D1, H0, J3
Suggested Citation:
Abstract: The paper analyses the effects of the unification of public pension systems financed on the PAYG basis. It focuses on a potentially inefficient allocation of labour, which may be caused by allowing households to choose repeatedly between public pension systems. The model examines perfect and imperfect labour mobility cases. Under perfect labour mobility, it ispossible to achieve both the inter-temporal and inter-regional efficient allocation of labour only if the level of social security payments is identical and fixed in time in all countries and if the
population growth is the same in all of the countries. If we either allow countries to differ in their level of social security payments or, if we allow them to change this level in time, the only level of social security payments which satisfies the efficiency conditions is zero. The model shows that even in the case of imperfect labour mobility, harmonisation of two PAYG systems is not a sufficient condition for the effective allocation of labour if fertility rates are observable before households decide upon their relocation. Therefore, labour mobility limits the government's freedom to maintain an independent social security system without causing an inefficient allocation of labour.
Downloadable: WP 26

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