When the state mirrors the family: The design of pension systems

Arbeitspapier

This paper studies the transmission mechanism from family culture to economic institutions, by analyzing the impact of the within family organization on the original design of the public pension systems. We build a simple OLG model with families featuring either weak or strong internal ties. When pensions systems are initially introduced, in society with strong ties they replicate the tight link between generations by providing earnings related benefits; whereas in societies with weak family ties they only act as a safety net. To test this transition mechanism, we consider Todd (1982) historical classification of family types across countries. We find that in societies dominated by absolute nuclear families (i.e., weak family ties), pension systems act as a flat safety net entailing a large within-cohort redistribution, and viceversa in societies characterized by stronger family ties where pension systems are more generous. This link between the type of families and the design of pension systems is robust to testing for alternative explanations, such as legal origin, religion, urbanization and democratization of the country at the time of their introduction. Interestingly, historical family types matter for explaining the design of the pension systems, which represents a persistent feature, but not their size, which have largely changed over time.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3191

Classification and Topics

• Classification: Wirtschaft ; Cultural Economics; Economic Sociology; Economic Anthropology: General ; Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification ; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: General, International, or Comparative ; Structure and Scope of Government: General ; Social Security and Public Pensions
• Subject: culture ; institutions ; historical evidence ; Familiensoziologie ; Alterssicherung ; Sozialgeschichte ; Gesetzliche Rentenversicherung ; Institutionalismus ; Vergleich ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Galasso, Vincenzo ; Profeta, Paola
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/46373
• Last update: 10.03.2025, 11:42 AM CET