Assessing Welfare Accounts

Foelster, Stefan; Gidehag, Robert; Orszag, J. Michael; Snower, Dennis J.

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Assessing Welfare Accounts

30 Pages Posted: 14 Sep 2002

See all articles by Stefan Foelster

Stefan Foelster

Confederation of Swedish Enterprise; Swedish Research Institute of Trade (HUI)

Robert Gidehag

Swedish Research Institute of Trade (HUI)

J. Michael Orszag

Willis Towers Watson - Reigate (Surrey Office); Institute for the Study of Labor (IZA)

Dennis J. Snower

University of Kiel - Institute for World Economics (IfW); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

There are 2 versions of this paper

Date Written: July 2002

Abstract

The paper examines the possible effects of introducing a large-scale welfare reform in Sweden, namely, the introduction of comprehensive welfare accounts. Under this policy, individuals make mandatory contributions to accounts, which they can top up with voluntary contributions. In return, individuals' welfare benefits are paid from their accounts. The paper uses a large panel of individual income data to examine how the adoption of universal welfare accounts may affect economic activity. We find that this policy could be designed so as to reduce social insurance expenditure considerably, improve the incentives to work and save, all with relatively small redistributive impact.

Keywords: Welfare reform, welfare accounts, social insurance, taxes, welfare state benefits

JEL Classification: H11, H21, H23, H51, H52, H53, H55

Suggested Citation: Suggested Citation

Foelster, Stefan and Gidehag, Robert and Orszag, J. Michael and Snower, Dennis J., Assessing Welfare Accounts (July 2002). Available at SSRN: https://ssrn.com/abstract=330542