Hostname: page-component-586b7cd67f-t8hqh Total loading time: 0 Render date: 2024-11-25T04:10:53.710Z Has data issue: false hasContentIssue false
  • English
  • Français

Dynamic microsimulation modelling of potential pension reforms in North Macedonia

Published online by Cambridge University Press:  10 January 2020

Blagica Petreski  and
Marjan Petreski Open the ORCID record for Marjan Petreski [Opens in a new window]
Blagica Petreski
Affiliation:
Finance Think – Economic Research and Policy Institute, Skopje, North Macedonia
Marjan Petreski*
Affiliation:
University American College Skopje, North Macedonia
*
*Corresponding author. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Due to structural and policy shifts, pension deficit in North Macedonia doubled over a decade and significantly outpaced the central budget deficit. The objective of the paper is to examine fiscal and development effects of few pension-reform designs. We constructed MK-PENS Dynamic Microsimulation Pension Model and simulated the effects of few reforms affecting one stakeholder and few combined reforms. Results robustly suggest that without reform and assuming only statutory pension adjustment, the deficit will remain as is. Simulated scenarios suggest that proposed pension reforms significantly reduce the pension deficit, with the most favourable results obtained within the combined scenarios of shared burden. Gradual introduction of reform's elements should come into play in case large political cost is envisaged.

Keywords

MicrosimulationNorth Macedoniapension deficitpension reform

JEL classification

H75: State and Local Government: Health • Education • Welfare • Public Pensions H55: Social Security and Public Pensions
Type
Article
Information
Journal of Pension Economics & Finance , Volume 20 , Issue 1 , January 2021 , pp. 49 - 66
Copyright
Copyright © The Author(s) (2020). Published by Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Atkinson, AB, Bourguignon, F, O'Donoghue, C, Sutherland, H and Utili, F (2002) Microsimulation of social policy in the European Union: Case study of a European Minimum Pension. Economica 69, 229–243.CrossRefGoogle Scholar
Blake, D and Mayhew, L (2006) On the sustainability of the United Kingdom state pension system in the light of population ageing and declining fertility. Discussion Paper PI-0413. The Pensions Institute, London.CrossRefGoogle Scholar
Blau, DM (2016) Pensions, household saving, and welfare: a dynamic analysis of crowd out. Quantitative Economics 7, 193–224.Google Scholar
Bonin, H (2009) 15 Years of Pension Reform in Germany: Old Successes and New Threats. IZA Policy Paper No. 11. Institute for the Study of Labour, Bonn.CrossRefGoogle Scholar
Bottazzi, R, Jappelli, T and Padula, M (2006) Retirement expectations, pension reforms, and their impact on private wealth accumulation. Journal of Public Economics 90, 2187–2212.CrossRefGoogle Scholar
Buyse, T, Heylen, F and Van de Kerckhove, R (2017) Pension reform in an OLG model with heterogeneous abilities. Journal of Pension Economics & Finance 16, 144–172.CrossRefGoogle Scholar
Caldwell, S (1996) Health, wealth, pensions and life paths: The CORSIM dynamic micro simulation model. In Harding, A (ed.), Micro Simulation and Public Policy. Amsterdam: Elsevier, pp. 505–522.Google Scholar
Dekkers, GJM (2007) Construction of a dynamic cross-sectional micro simulation model: the state of affairs. Intermediate report 4.10, task 4.1. AIM Interim Research Report 4.10. Brussels.Google Scholar
Dekkers, G, Buslei, H, Cozzolino, M, Desmet, R, Geyer, J, Hofmann, D, Raitano, M, Steiner, V, Tanda, P, Tedeschi, S and Verschueren, F (2009) What are the Consequences of the AWG-Projections for the Adequacy of Social Security Pensions? ENEPRI Research Report No. 65.Google Scholar
Emmerson, C, Reed, H and Shephard, A (2004) An assessment of PENSIM2, IFS Working Paper WP04/21, London: Institute for Fiscal Studies.Google Scholar
Fehr, H, Kallweit, M and Kindermann, F (2012) Pension reform with variable retirement age: a simulation analysis for Germany. Journal of Pension Economics & Finance 11, 389–417.CrossRefGoogle Scholar
Ferraresi, PM and Monticone, C (2009) A Semi-Aggregate Model for Social Expenditure Projections, ENEPRI Research Report No.62. Brussels: Centre for European Policy Studies.CrossRefGoogle Scholar
Fonseca, RB and Sopraseuth, T (2007) Welfare effects of social security reforms across Europe the case of France and Italy. Working Papers WR-437, RAND Corporation.Google Scholar
Fredriksen, D, Holmøy, E, Strøm, B and Stølen, NM (2019) Fiscal effects of the Norwegian pension reform – A micro–macro assessment. Journal of Pension Economics & Finance 18, 88–123.CrossRefGoogle Scholar
Gál, R, Horváth, A, Orbán, G and Dekkers, G (2009) PENMICRO Monitoring pension developments through micro socioeconomic instruments based on individual data sources: feasibility study.Google Scholar
Goodman, A, Brewer, M, Emmerson, C, Muriel, A, Browne, J and Tetlow, G (2007) Pensioner Poverty Over the Next Decade: What Role for tax and Benefit Reform. London: Institute for Fiscal Studies.Google Scholar
Harding, A (2006) NATSEM – Modelling our future: Population ageing and social policy, Presentation to the Australian Social and Economic Policy Lecture Series, Demography and Sociology Program, Australian National University, 31 October 2006.Google Scholar
Hering, M (2006) The politics of structural pension reform in Western Europe: Does the EU matter? Paper presented at the Fifteenth International Conference of the Council for European Studies, March 29–April 2, 2006, Chicago.Google Scholar
Indicators Sub-Group (2009) Updates of Current and Prospective Theoretical Pension Replacement Rates 2006–2046. Brussels: European Commission.Google Scholar
Kakes, J and Broeders, D (2007) The sustainability of the Dutch pension system. Occasional Studies 6, 1–92.Google Scholar
Kruse, A (2010) A stable pension system: The eighth wonder. In Bengtsson, T (ed.), Population Ageing—A Threat to the Welfare State. Berlin: Springer Verlag, pp. 47–64.CrossRefGoogle Scholar
Law on Pension and Disability Insurance (2016). Official Gazette of the Republic of Macedonia, no. 98/2012, 166/12 and 15/13.Google Scholar
Martin, JP and Whitehouse, E (2008) Reforming retirement-income systems: lessons from the recent experiences of OECD countries. Social, Employment and Migration Working Papers, DELSA/ELSA/WD/SEM (2008)3.Google Scholar
Merz, J (1993) Micro simulation as an Instrument to Evaluate Economic and Social Programmes, Working Paper no. 5, Forschungsinstitut Freie Berufe FFB, University of Lueneburg.Google Scholar
Merz, J (1994) Micro simulation – A Survey of Methods and Applications for Analyzing Economic and Social Policy, Working Paper no. 9, Forschungsinstitut Freie Berufe FFB, University of Lueneburg.Google Scholar
OECD (2007) Pensions at a Glance 2007: Public Policies across OECD Countries. Paris: OECD Publishing, https://doi.org/10.1787/pension_glance-2007-en.Google Scholar
Orban, G and Palotai, D (2005) The sustainability of the Hungarian pension system: A reassessment. Magyar Nemzeti Bank Occasional Paper No. 40.Google Scholar
Pension and Disability Insurance Fund of North Macedonia (2014) Report on the Pension System in the Republic of Macedonia, with Actuarial Projections. Skopje: PDIF.Google Scholar
Pension and Disability Insurance Fund of North Macedonia (2015) Report on the Pension System in the Republic of Macedonia, with Actuarial Projections. Skopje: PDIF.Google Scholar
Petreski, M and Mojsoska-Blazevski, N (2016) The Gender and Motherhood Wage Gap in the Former Yugoslav Republic of Macedonia: An Econometric Analysis. Budapest: International Labor Organization (ILO).Google Scholar
Petreski, M and Mojsoska-Blazevski, N (2017) Overhaul of the social assistance system in Macedonia: Simulating the effects of introducing Guaranteed Minimum Income (GMI) scheme. Finance Think Policy Study No. 11.Google Scholar
Saez, E (2010) Do taxpayers bunch at kink points? American Economic Journal: Economic Policy 2, 180–212.Google Scholar
Soede, AJ, Vrooman, C, Ferraresi, PM and Segre, G (2004) Unequal Welfare States: Distributive Consequences of Population Ageing in six European Countries. The Hague: Social and Cultural Planning Office.Google Scholar
Spadaro, A (2007) Microsimulation as A Tool for Evaluation of Public Policies – Methods and Applications. Bilbao: Fundación BBVA.Google Scholar
Verbič, M (2007) Varying the parameters of the slovenian pension system: an analysis with an overlapping-generations general equilibrium model. Post Communist Economies 19(4), 449–470.CrossRefGoogle Scholar