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Retirement Models and Debates


Thu 27. 8.  16:00 - 17:30
room FA 202

Labour share and its hidden impact on pension system


Müller, Adam
University of Warsaw, Poland

Proposed presentation is based on my studies concerning social debate about Polish pension system reform in 2012. Advocates of reform emphasized that in face of negative demographic changes retirement age should be extended, what was presented as only one solution that can safe pension system.. However economic literature according to Nicholas Barr (2001) shows that condition of pension system depends on various factors and that analysing the system one should include the significant impact of labour share in GDP. Granted that productivity growth implies increase in wages, rising GDP allows to increase government’s revenue and the negative demographic changes should be neutralized. However, if increase in productivity does not entail an increase in wages, funds for pensions do not rise as well. As labour share is a consequence of institutional choices and has profound impact on condition of social policy funds it constitutes an alternative for retirement age extension. The analysis of institutional alternatives to financing pensions may be used as background for evaluation of democratic debate in modern societies. Comparison of those alternatives and arguments presented in the debate leads to conclusion about its nature. The debate was limited to the presentation of government’s position to institutional changes and did not seek for optimal solution for citizens’ future. Literature: Barr, Nicholas (2001), "The Welfare State as Piggy Bank", Oxford University Press