The interaction between pension schemes and economic activity: a «demand-based» theoretical approach

PDF
Published: Apr 20, 2024
Updated: 2024-04-20
Versions:
2024-04-20 (2)
DOI: https://doi.org/10.12681/scad.37297
Keywords:
Pension schemes, demographic projection, macroeconomic environment, functional income distribution..
Zois Gerasimos Katsimigas
University of Athens
https://orcid.org/0009-0001-2848-5308
Christos Papatheodorou
Panteion University of Social and Political Sciences,Athens, Greece
https://orcid.org/0009-0001-2848-5308
Abstract

Motivated by the recent capitalization of the auxiliary pension and the demographic projections of ageing and population decline in the coming decades in Greece, we will identify and examine the determinants of the pensions of the two social security schemes (PayAs-You-Go & Fully Funded), their relationship with the functional distribution of income, as well as their interaction with economic activity. The aim is to highlight the importance of examining pension systems in relation to the macroeconomic environment in order to clarify the impact of both demographic changes and fiscal policies to reduce the pension system dependency ratio, and the state contribution to pensions on economic activity and
public debt.

Article Details
  • Section
  • Articles
Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution Non-Commercial License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g. post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (preferably in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
Downloads
Download data is not yet available.
Author Biographies
Zois Gerasimos Katsimigas, University of Athens

Zois Gerasimos Katsimigas, graduated from the Department of Economics, University of Athens,
holds an MSc in applied economics and has recently submitted his PhD thesis to the same Department. His research interests focus on social policy, income inequality, the macroeconomic environment and income distribution, pension schemes and SFCM macroeconomic models. Contact
email: akiskatsimigas@hotmail.com

Christos Papatheodorou , Panteion University of Social and Political Sciences,Athens, Greece

Christos Papatheodorou is Professor of Social Policy at the Panteion University of Social and
Political Sciences (Athens, Greece). His main areas of research interests and publications are in
the fields of the political economy of social policy, social and economic inequalities, poverty, macroeconomic environment and social protection, functional and personal distribution of income.

References
Bibliographical References
Alonso-Garcίa, J., Boado-Penas, M., & Devolder, P. (2018). Adequacy, fairness and sustainability
of pay-as-you-go-pension-systems: defined benefit versus defined contribution. The European Journal of Finance, 24(13), pp. 1100-1122.
Artige, L., Cavenaile, L., & Pestieau , P. (2014). The macroeconomics of PAYG pension schemes
in an aging society. macroeconomics, 33.
Attanasio, O., Kitao, S., & Violante, G. (2007). Global demographic trends and social security
reform. Journal of monetary Economics, 54(1), pp. 144-198.
AWG. (2018). The 2018 Ageing Report: Economic and Budgetary Projections for the EU-28 Member States (2016-2070). Ageing Working Group Economic Policy Committee.
AWG. (2021). The 2021 Ageing Report: Economic and Budgetary Projections for the EU Member
States (2019-2070). Ageing Working Group Economic Policy Committee.
Bhaduri, A., & Marglin, S. (1990). Unemployment and the real wage: the economic basis for
contesting political ideologies. Cambridge journal of Economics, 14(4), pp. 375-393.
Bijlsma, M., van Ewijk, C., & Haaijen, F. (2014). Economic growth and funded pension systems.
Netspar Discussion Papers, (DP 07/2014-030).
Blake, D. (2006). Pension economics. Chichester, West Sussex: John Wiley & Sons Ltd.
Blecker, R. A. (1989). International competition, income distribution and economic growth.
Cambridge Journal of Economics, 13(3), pp. 395-412.
Bovenberg, A. (2008). Grey new world: Europe on the road to gerontocracy? CESifo Economic
Studies, 54(1), pp. 55-72.
Cassetti, M. (2003). Bargaining Power, Effective Demand and Technical Progress: A Kaleckian
Model of Growth. Cambridge Journal of Economics, 27(3), pp. 449-464.
Cavallini, P., Carmeci, G., & Millo , G. (2013). Are funding of pensions and economic growth
directly linked? New empirical results for some OECD countries. DEAMS Research Paper
Series, no.7.
Cesaratto, S. (2006). Transition to fully funded pension schemes: a non-orthodox criticism.
Cambridge journal of economics, 30(1), pp. 33-48.
Christodoulakis, N., Nektarios, M., Theocharis, C., Aksioglou, C., Kouris, P., & Symeonidis, G.
(2018). Restarting the Greek Economy. Dianeosis (in Greek).
Cigno, A. (2007). Low fertility in Europe: Is the pension system the victim or the culprit? Introduction by Alessandro Cigno. CESifo Forum, 8(3), pp. 37-42.
Cipriani, G. (2014). Population aging and PAYG pensions in the OLG model. Journal of population economics, 27(1), pp. 251-256.
Cipriani, G. (2018). Aging, retirement, and pay-as-you-go pensions. Macroeconomic Dynamics,
(5), pp. 1173-1183.
Cipriani, G., & Pascucci, F. (2020). Pension policies in a model with endogenous fertility. Journal
of Pension Economics & Finance, 19(1), pp. 109-125.
Daskalopoulos, H., Zarkadoulas, L., & Symeonidis, G. (2018). Alternative approaches to improving the pension system. Hellenic Actuarial Society (in Greek).
Davis, E., & Hu, Y. (2008). Does funding of pensions stimulate economic growth?. Journal of
Pension Economics & Finance. 7(2), pp. 221-249.
De la Croix, D., Pierrard, O., & Sneessens, H. (2013). Aging and pensions in general equilibrium:
Labor market imperfections matter. Journal of Economic Dynamics and Control, 37(1), pp.
-124
Dedry, A., Onder, H., & Pestieau, P. (2017). Aging, social security design, and capital accumulation. The Journal of the Economics of Ageing, 9, pp. 145-155.
Eurostat. (2022a). Population on 1st January by age, sex and type of projection (proj_19np),
Population projections at national level (2019-2100) (proj_19n), Eurostat Database.
Retrieved from https://ec.europa.eu/eurostat/databrowser/view/proj_19np/default/
table?lang=
Eurostat. (2022b). Pensions (spr_exp_prns). Social protection expenditure, Population and social
conditions. Eurostat Database. Retrieved from https://ec.europa.eu/eurostat/databrowser/
view/SPR_EXP_PENS__custom_4602202/default/table?lang=en
Fanti, L., & Gori, L. (2012). Fertility and PAYG pensions in the overlapping generations model.
Journal of Population Economics, 25(3), pp. 955-961.
Feldstein, M. (1997). Transition to a Fully Funded Pension System: Five Economic Issues. NBER
Working Paper, 6149.
IOBE. (2019). Pension reform and development. Foundation for Economic & Industrial Research
(in Greek).
Kalecki, M. (1937). The principle of increasing risk. Economica, 4(16), pp. 440-447.
Kalecki, M. (1942). A theory of profits. The Economic Journal, 52(206/207), pp. 258-267.
Makarski, K., Hagemejer, J., & Tyrowicz, J. (2017). Analyzing the efficiency of pension reform:
the role of the welfare effects of fiscal closures. Macroeconomic Dynamics, 21(5), pp.
-1234.
Marglin, S. A., & Bhaduri, A. (1991). Profit squeeze and Keynesian theory. In Nicholas Kaldor
and Mainstream Economics (pp. 123-163). London: Palgrave Macmillan.
Morimoto, T., Nakabo, Y., & Tabata, K. (2018). Population aging, labor market frictions, and
PAYG pension. Kwansei Gakuin University Discussion Paper (172).
Nektarios, M., Tinios, P., & Symeonidis, G. (2018). Pensions for young people. Athens: Papazisis
(in Greek).
Pissarides committee. (2020). Development Plan for Greek Economy: Final Report. Greek
government (in Greek)
Robolis, S., & Betsis, V. (2021). Demography, economic crisis and social security (in Greek).
Social Policy, 11, pp. 42-60.
Screpanti, E. (1996). A pure insider theory of hysteresis in employment and unemployment.
Review of Radical Political Economics, 28, pp. 93-112.
Screpanti, E. (2000). Wages, employment and militancy: a simple model and some empirical
tests. Review of Radical Political Economics, 32, pp. 171-196.
Siebert, H. (1997). Pay-as-you-go versus capital funded pension systems: the issues. Kiel Working Paper(816).
Symeonidis, G., Tinios, P., & Xenos, P. (2021). Enhancing Pension Adequacy While Reducing
the Fiscal Budget and Creating Essential Capital for Domestic Investments and Growth:
Analysing the Risks and Outcomes in the Case of Greece. Risks, 9(8).
United Nations Department of Economic and Social Affairs, Population Division. (2020).
World Population Ageing 2020 Highlights: Living arrangements of older persons (ST/ESA/
SER.A/451). Retrieved from https://www.un.org/development/desa/pd
Whitehouse, E. (2007). Life-epectancy risk and pensions: who bears the burden? OECD Social,
Employment, and Migration Working Papers, 60(1).
Whitehouse, E. (2012). Parallel lines: Ndc pensions and the direction of pension reform in developed countries. Nonfinancial Defined Contribution Pension Schemes in a Changing Pension
World, 1, pp. 85-105.
Most read articles by the same author(s)