Project in detail

Redistributive Flows in the German Social Insurance System

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Redistributive Flows in the German Social Insurance System The German social insurance system is characterized by large redistributive flows. Aside from the redistribution typical of pay-as-you-go schemes, such as financial flows from compulsorily ensured employees to pensioners, numerous other redistributive flows arise, for example, from income-related contribution assessment, or from the contribution-free co-insurance of children and non-employed spouses under statutory health and long-term care insurance. The individual social insurance branches moreover comprise a host of special provisions that generate interpersonal and intergenerational redistributive effects. The manifold triggers of such effects are accountable for a great lack of transparency in overall redistribution within the social insurance system. The project set out to make the various redistributive flows more transparent and to quantify them. To that end, the contributions paid by specific insured groups (employees, the unemployed, pensioners and children), age cohorts, income groups, and by men and women were compared with the benefits they receive, in order to determine a ``net contribution´´ flow from one group to another, or profiting one group rather than another. The first step was to analyze the group of compulsorily insured employees as the main source of redistributive flows. This group's net contributions – under each of the social insurance branches and separated according to age, sex and income – to other groups such as pensioners, children and the unemployed were ascertained, along with the interpersonal flows within the group itself (cf. MEA Discussion Paper No. 189-09). The second step focused on the group of statutory pension recipients (cf. MEA Discussion Paper No. 203-10). Prospective steps are to include all other insured groups in the analysis, thus ultimately creating a ``redistribution balance sheet´´ for the whole German social insurance system. That would heighten the transparency of social-insurance-induced redistribution and provide a point of departure for future reforms.

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