Political Risk of Social Security: Evidence from Reforms in Hungary and the Czech Republic
| Autor: | |
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| Typ: | Články ve sborníku |
| Rok: | 2008 |
| Číslo: | 0 |
| ISSN / ISBN: | |
| Publikováno v: | zbornik z konference Vyskumneho zameru 2007 |
| Místo vydání: | Praha |
| Klíčová slova: | social security, policy risk, pension reforms |
| JEL kódy: | H55, G32, P35 |
| Citace: | |
| Granty: | Výzkumný záměr IES (2005-2011) Integrace české ekonomiky do Evropské unie a její rozvoj |
| Abstrakt: | We document the political risk of social security in Hungary and the Czech Republic by measuring the changes in the social security wealth induced by the pension reforms undertaken in these countries since the 1990s. Methodologically we follow upon McHale’s (2001) study of selected reforms in G7 countries. We compute the changes in social security wealth separately for representative male and female workers in all age cohorts and different educational categories. Our results therefore provide more comprehensive picture of the differential impacts of pension reforms on different workers. The Czech 1996 reform reduced the social security wealth of almost all workers by the magnitude of 2 to 3 annual average earnings. The negative impact was more pronounced for women but was distributed fairly equally across cohorts and income levels. In Hungary, the early (1993 and 1997) reforms had negative impact on workers near the retirement age. The 1998 reform which introduced a privately funded second pillar was highly advantageous for middle-aged and young men with university education but had a negative impact on most other workers, and exposed workers to additional uncertainty about future taxation of benefits. Overall, the paper documents that pay-as-you-go system is not a predictable source of income since legislative reforms, particularly in the Hungarian case, do frequently change the future taxes and benefits in different directions for different people. |
