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Peace Economics, Peace Science and Public Policy

Editor-in-Chief: Caruso, Raul

Ed. by Bove, Vincenzo / Kibris, Arzu / Sekeris, Petros

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Volume 24, Issue 2


Volume 17 (2011)

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Volume 1 (1993)

Illusory Gains from Privatizing Social Security when Reform is Politically Unstable

Marcin Bielecki
  • University of Warsaw, Warsaw, Poland
  • National Bank of Poland, Warsaw, Poland
  • FAME|GRAPE, Warsaw, Poland
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Krzysztof Makarski
  • National Bank of Poland, Warsaw, Poland
  • FAME|GRAPE, Warsaw, Poland
  • Warsaw School of Economics, Warsaw, Poland
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Joanna Tyrowicz
  • Corresponding author
  • University of Warsaw, Warsaw, Poland
  • FAME|GRAPE, Warsaw, Poland
  • IAAEU, Trier, Germany
  • IZA, Bonn, Germany
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2018-05-17 | DOI: https://doi.org/10.1515/peps-2018-0008


With compulsory funded public social security systems, pension savings constitute a large stock of assets. In this paper we consider an economy populated by overlapping generations, which may decide about abolishing the funded system and replacing it with the pay-as-you-go scheme (i.e. unprivatizing the pension system). We compare politically stable as well as politically unstable reforms and show that even if the funded system is overall welfare enhancing, the cohort distribution of benefits along the transition path may turn privatizing social security politically unsustainable.

Keywords: pension system reform; time inconsistency; welfare

JEL Classification: H55; D72; C68; E17; E27


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About the article

Published Online: 2018-05-17

Funding Source: National Science Center

Award identifier / Grant number: grant 2014/13/B/HS4/03264

The support of National Science Center (grant 2014/13/B/HS4/03264) is gratefully acknowledged.

Citation Information: Peace Economics, Peace Science and Public Policy, Volume 24, Issue 2, 20180008, ISSN (Online) 1554-8597, DOI: https://doi.org/10.1515/peps-2018-0008.

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