Benefit-Cost Analysis of Turkish Social Insurance Institute's Gradual Privatization Proposal
Journal of Economic Cooperation, Vol. 26, No. 4, pp. 87-126, 2005
40 Pages Posted: 17 Jan 2006
Abstract
There has been consideration of alternative social security financing methods throughout the world during the last two decades. One alternative adopted in several countries is the privatization of so-called pay-as-you-go financing systems. The purpose of this study is to estimate social benefits and social costs associated with a Feldsteinian-type gradual privatization of the Turkish Social Insurance Institute, SSK. Based heavily upon data provided by the International Labor Organization, financial projections of the institution were made and extended to apply benefit-cost models of privatization. Present values of the change in net social benefit were estimated. The effect of privatization on representative individuals has been quantified. Sensitivity analyses were conducted to determine the robustness of the estimates. Benefit-cost results indicate that social benefits associated with a privatization alternative exceed the social costs even after adjustments for changes in key parameters that reduce social net benefits. However, privatization affects current representative individuals so negatively that it may constitute a good political reason to be against, rather than in favor of, choosing privatization.
Keywords: social security, privatization, benefit-cost analysis, Social Insurance Institute, SSK
JEL Classification: H5, H55
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Missing Piece in Policy Analysis: Social Security Reform
-
By John Geanakoplos, Olivia S. Mitchell, ...
-
By John Geanakoplos, Olivia S. Mitchell, ...
-
How Effective is Redistribution Under the Social Security Benefit Formula?
-
How Effective is Redistribution Under the Social Security Benefit Formula?
-
Would a Privatized Social Security System Really Pay a Higher Rate of Return?
By John Geanakoplos, Olivia S. Mitchell, ...