Fafo reports


The taming of inequality in retirement
A comparative study of pension policy outcomes, Doctoral Dissertation

Axel West Pedersen

Fafo-report 317

Web edition How can public pension systems be adjusted to the economic realities of the 21st century, while at the same time avoid a soaring of income inequality among future generations of retirees? Could it be that public pension systems that reproduce the distributive logic of the labor market are better suited to the taming of income inequality in retirement? This study is focussed on a particular argument that has prevailed in both historical and contemporary policy debates and has received considerable attention in the comparative welfare state literature. “The egalitarian argument in favor of earnings- related pensions” embodies the rather paradoxical idea, that a mixed system of flat-rate and earnings related pensions is likely to be superior to a system concentrated on minimum protection – even in terms of preventing excessive income inequality in retirement. In order to clarify the theoretical and empirical issues, a suggestion is made to specify the argument in terms of a more detailed set of mechanisms and in terms of testable hypotheses. These hypotheses are in turn confronted with relevant empirical evidence – primarily in the form of a comparative analysis involving a sample of nine OECD-countries. The thesis is organized in three parts. Part I gives a thorough treatment of the relevant theoretical and methodological issues. Part II presents the results of the comparative analysis of institutional data and of micro-data for the nine country cases. Finally, Part III offers a more in depth study of the income distribution among old age pensioners in Denmark, a country that appears to stand out as a critical case in the comparative analysis.

Utgitt: 1999 Id-nr.: 317