Bernd Raffelhüschen

Can Immigration Alleviate the Demographic Burden

This paper investigates the impact of immigration on intertemporal public budgets. A modified generational accounting framework is employed to compute the average net contribution of migrants to the public sector budget in Germany. Our findings suggest that the overall fiscal contribution of immigrants is positive if they resemble current migrant residents in their economic characteristics. Therefore, immigration can decrease the fiscal burden of future resident generations. We also show that active migration policy favoring high-skilled immigrants to facilitate their labor market assimilation, may considerably enlarge the positive impact of immigration on the tax burden of native residents. However, even high immigrant inflows only partially remove the intergenerational fiscal imbalance induced by aging in Germany.

Funding social security through Pareto-optimal conversion policies

This paper examines Pareto-superior funding strategies for a pay-as-you-go financed social security system, using a dynamic simulation approach. A life-cycle model is employed to derive realistic estimates concerning the pure efficiency gains of that policy. As a result, the representative individuals are free to allocate goods as well as leisure time over their life span.The differentiation between efficiency gains and intergenerational redistribution is made possible by a tax-transfer authority which compensates all generations otherwise burdened with debt financed transfer programs. Institutional requirements and the parameter estimates underlying the policy simulations reflect the German social security system, although conclusions about other countries and circumstances could easily be drawn.

Social security and intergenerational redistribution: A generational accounting perspective

This paper is concerned with the analysis of intergenerational redistribution in a pay-as-you-go financed social security scheme. Instead of annual fiscal indicators, we apply generational accounts to calculate the intertemporal effects arising from a projected aging process. As a case study, the institutional settings and the parameterization of our model refer to the conditions found in Germany in 1989. Additionally, the intergenerational impacts of the German 1992 Pension Reform Act are taken into account. Our findings suggest that the major reform measures affect the distribution of the demographic burden between future and presently living generations. However, the burden is shifted in favor of the generations currently alive, thereby contradicting the explicit political intentions and aggravating the situation for future generations.

Reforming social security in a small open economy

Abstract We examine funding strategies for social security in a small open economy. A life cycle based dynamic simulation approach derives transition paths of policies that phase down social security in a pre-announced and gradual manner. Agents are free to allocate goods and leisure time over their life span. In addition, a ‘joy of giving’ bequest motive is taken into account. The model is calibrated to the Norwegian social security system. We find that both the announcement and the endogenous responses in the labor market and through bequests, offset most of the intergenerational redistribution problems occurring during the transition.

Zukünftige Pflege ohne Familie: Konsequenzen des "Heimsog-Effekts"

Zusammenfassung Jegliche Veränderungen im Inanspruchnahmeverhalten bei der Wahl der Art der Pflege von einer günstigeren hin zu einer teureren Versorgungsform gehen mit Auswirkungen auf die zukünftige Ausgabenentwicklung der sozialen Pflegeversicherung einher. Dabei ist ein verändertes Inanspruchnahmeverhalten bereits das Resultat der demographischen Entwicklung, möglicherweise verschärft durch sich verändernde Haushalts- und Familienstrukturen sowie eine zunehmende Erwerbsbeteiligung der Frauen. In welchem Ausmaß Veränderungen in den Pflegearrangements mit Ausgabensteigerungen einhergehen, soll im Rahmen dieses Beitrags untersucht werden.

Generational accounting and intergenerational welfare

We investigate the intergenerational welfare implications of Generational Accounting when it is used as the basis for intertemporal fiscal policy decisions. In particular, we consider an economy with a PAYGO social security system out of steady state due to a permanent fall in fertility. In a highly stylized CGE overlapping generations model we illustrate that policy recommendations based on a standard application of Generational Accounting may not be compatible with intertemporal welfare maximization. Our model provides an example where such policies are either time inconsistent or welfare-decreasing.

Zur Nachhaltigkeit der Generationenverträge: Eine Diagnose der Kranken- und Pflegeversicherung

ZusammenfassungDer vorliegende Aufsatz analysiert die Auswirkungen der heutigen Fiskalpolitik in Deutschland mit Hilfe der Generationenbilanzierung und zeigt, dass gegenwärtig keine Nachhaltigkeit besteht. Dies ist maßgeblich auf die umlagefinanzierten „Generationenverträge“ zurückzuführen. Anhand einer isolierten Betrachtung der gesetzlichen Kranken- und Pflegeversicherung wird aufgezeigt, dass allein durch diese beiden Sozialversicherungssysteme zukünftigen Generationen eine implizite Schuld von mehr als zwei Bruttoinlandsprodukten aufgebürdet wird. Ohne radikale Reformen, die die heutigen Regulierungs- durch Deregulierungsmaßnahmen ersetzen, ist in den nächsten drei Jahrzehnten mit explodierenden Beitragssätzen in der gesetzlichen Kranken- und Pflegeversicherung zu rechnen.AbstractEmploying the generational accounting approach, this paper analyses the stance of fiscal policy in Germany. We find that fiscal policy is presently not sustainable, which is mainly due to pay-as-you-go financed social insurance systems. In order to illustrate the relative impact, we isolate the Public Health Insurance and the Public Long Term Care Insurance. Our findings suggest that without radical reforms the implicit debt burden for future generations might reach a magnitude of more than two times the annual GDP and contribution rates to both schemes will explode during the next three decades.

Möglichkeiten einer verfassungskonformen Reform der gesetzlichen Pflegeversicherung

Abstract In their contribution Bernd Raffelhüschen and Jasmin Häcker point out that by now it is common knowledge that the German Long-term Care Insurance (LTCI) is in urgent need of a broad reform. Without any doubt, two fundamental mistakes have been made from the scretch: First, it was constructed as a pay-asyou- go scheme, despite of the demographic turbulence ahead. Secondly, contributions were drawn from the payroll although the risk of long-term care is definitely not correlated with personal income. Hence, it is essential to revise both mistakes and to bring about a new and sustainable insurance scheme. In their paper they suggest a reasonable transition from the current pay-as-you-go system to a fully funded strategy thereby accounting for the burden each generation is confronted with. With the help of generational accounting they demonstrate that the so called “Auslaufmodell” achieves a certain intergenerational balance. It is, however, crucial that the reform takes place instantly, otherwise it will never. This is due to the fact that only in the very near future people can not argue that they have paid their dues. Winfried Schmähl and Heinz Rothgang discuss the consequences of a judgement of Germany′s Constitutional Court. In April 2004 it decided that the Social Long-term Care Insurance discriminates families as compared to those without children since the former also contribute to the system by raising children while the latter do not. The court thus asks for an internalisation of the externalities resulting from child raising, i.e. future contributions of the children. Until 2004 the legislator has to reform the financing system respectively. In this article several options to do so are discussed. With respect to five normative criteria the authors conclude that a reduction of contributions for families is inferior to a fixed cash transfer per child financed by a special tax. Gisela Färber points out that reforming Germany′s system of Long-term Care Insurance (LTCI) is necessary for two major reasons: Since 1999, spendings in this pillar of Social Insurance in Germany exceed contributions; in 2003 deficits added up to 700 Million Euro. Demographic changes will even increase the funding gap. Furthermore, Germany′s Constitutional Court decided that families are discriminated in the existing pay-as-you-go system, a disadvantage which has to be corrected before end of 2004. The author criticises the Court’s argumentation from an economic point of view. She argues that the problem of LCI is not the lack of children but the increase of life expectancy with each year of birth. She therefore proposes to add elements of capital funding within or besides the existing system which helps to overcome the increasing costs. A total abolition of the pay-as-you-use principle however would restrict (limited, but necessary) spaces of redistribution within the LTCI. Furthermore, adult family members of employees should not get free insurance coverage anymore, but pay at least a minimum rate of contribution themselves. Then contributions for family members during a certain period of education might be subsidised by tax revenue.

En route to sustainability: History, status quo and future reforms of the German public pension scheme

Pension reform is high on the agenda almost everywhere in Europe. The contributions to this Forum outline the different pension systems of selected European countries, providing an assessment of both the reform steps taken so far and the need for further reform.

Friedens- versus Ausscheidegrenze in der Krankenversicherung: Ein kriegerischer Beitrag für mehr Nachhaltigkeit

ZusammenfassungDie private (PKV) und die gesetzliche Krankenversicherung (GKV) werden durch die so genannte Friedensgrenze getrennt. Um die daraus resultierende Risikoselektion zu vermindern, wird die Einführung einer so genannten Ausscheidegrenze nach niederländischem Vorbild mit Hilfe der Generationenbilanzierung untersucht. Aufgrund der Einkommensumverteilung innerhalb der GKV führt eine solche Reform nicht zu mehr Nachhaltigkeit. Jedoch kann eine Ausscheidegrenze eine positive Dynamik entfalten, wenn entweder ein System von Gesundheitsprämien in der GKV vorherrscht oder aber die PKV für die neuen Kunden eine „Ablöseprämie“ zahlt, die genau den Umfang der Einkommensverteilung dieser Gruppe ausmacht.AbstractThe German health insurance system is separated between the private and public sector by a social security ceiling. To reduce the risk selection of the current system we discuss the implications of the conversion of the upper income limit into a provision limit. Using a generational accounting approach, we find that such a conversion has a negative effect in respect of sustainability. In addition, we present the idea of a transfer premium, which reflects the value of the analyzed group of insurants. Our results show that with a transfer premium or in a system of lump-sum-premiums, the provision limit would have positive implications and would leave the German system more sustainable.