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Redistributive pensions in the developing world

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  • Kemmerling, Achim
  • Neugart, Michael
Abstract
Redistributive so-called social pension schemes have seen a remarkable surge in developing countries. These schemes often target the rural elderly and correlate with urbanization rates, urban rural-wage differentials, and family norms. We use this stylized evidence to motivate a political economy model for a Beveridgean pension system with trade-offs between four groups: the (poorer) rural old and young, and the (richer) urban old and young. We show under which conditions governments will install a pension system and increase its generosity as the share of the urban population rises, productivity differentials between urban and rural workers widen, or the social norm erodes. Our conclusion is that the role of the rural–urban divide in shaping redistribution merits more scholarly attention, as the gap between cities and the countryside widens in many developing countries.

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  • Kemmerling, Achim & Neugart, Michael, 2024. "Redistributive pensions in the developing world," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 146282, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:146282
    DOI: 10.1111/rode.12582
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/146282/
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