Chapter

Introduction: A European Perspective

Horst Siebert

in Social Security Pension Reform in Europe

Published by University of Chicago Press

Published in print January 2002 | ISBN: 9780226241081
Published online February 2013 | e-ISBN: 9780226241913 | DOI: http://dx.doi.org/10.7208/chicago/9780226241913.003.0002
Introduction: A European Perspective

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As the population ages in the major continental countries of Europe, a larger proportion of gross domestic product will have to be spent to finance pay-as-you-go (PAYGO) systems. The problem of the PAYGO system is an issue not only of financial sustainability, but also of labor market distortions and resulting unemployment. Contributions to the pension system have an incidence similar to an explicit tax on labor; they weaken the demand for labor, which in turn implies a lower net wage. This chapter first reviews the efforts of European governments to deal with the pension crisis, which involve finding new sources of financing for their public systems and changing the supply of labor. It then proposes solutions to the problem including the reduction of the benefit level and introduction of a “funded pillar”. It concludes with a discussion of some specific issues of the pension system in an increasingly integrated Europe.

Keywords: Europe; aging population; pay-as-you-go systems; retirement income; pension system; welfare state; labor; funded pillar

Chapter.  3695 words.  Illustrated.

Subjects: Public Economics

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