erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

The Intergenerational Redistributive Impact of the Social Insurance Institute’s (SSK) Pension Scheme.

Ayfer Karayel (Galatasaray University)

Abstract

The purpose of the research is to analyse the intragenerational redistributive effects of the old-age insurance component of the SSK scheme in Turkey before and after the change of the rules of regulation in 1999. The intragenerational redistribution means that income is redistributed between different socio-economic categories of workers within the same generation as the result of the rules of regulation (ex ante redistribution) and systematic differential behaviour of these categories determining the length of their professional life and retirement period (ex post redistribution). The relation between the intergenerational and intragenerational redistribution, and different measures used to assess the latter are discussed. The expected present value of contributions paid during the working life, the expected present value of benefits received during the retirement, and the present value of total wages earned by hypothetical workers of different wage levels are computed. The extent of the intragenerational redistribution is assessed by comparing the individual ratios of the net transfer (total benefits minus total contributions) to total wages. A simple static simulation is applied to standardized workers. The impacts are examined in a steady-state economic scenario with no population growth to be able to use an appropriate discount rate, and without taking into account the transitional impacts, because different regulations can only be compared in this way.

The general results are that before the change of the rules of regulation, the system was progressive within generations while yielding high rates of return to all the workers, but has become regressive within generations after the reform without yielding a significant rate of return to any of the workers.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
Phone: + 90 312 210 3044, 210 2003
Fax: +90 312 210 1244
e-mail: metuerc@metu.edu.tr