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Social Security

Social Security. A Global Perspective. “Social security”. Has a broad meaning Refers to economic protection needed because of Unemployment Disability Old age Raising children. Why government?. Families have never been a completely reliable source of social protection.

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Social Security

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  1. Social Security A Global Perspective

  2. “Social security” • Has a broad meaning • Refers to economic protection needed because of • Unemployment • Disability • Old age • Raising children

  3. Why government? • Families have never been a completely reliable source of social protection. • With modernization, government came to play a large role • Also shares the risks across a large population

  4. The “welfare state” • Ill-defined term • Can refer to • A state that assumes primary responsibility for the welfare of its citizens • A state that creates a minimum “safety net” for its citizens • Many institutions are part of the welfare state • Environmental laws • Food and drug safety • Anti-discrimination laws

  5. Public vs. private • The most comprehensive welfare states seek public (i.e., government or other collectives) ways to help citizens • Other states rely more on the private sector (labor markets, private charity) • Remember liberal vs. conservative?!

  6. U.S. “welfare state” is mostly for older people • Comprehensive programs • Income support (Social Security) • Health care (Medicare) • Large share of federal expenditures

  7. Globally, public pensions systems vary by • Coverage • What rules govern eligibility? • Amount of benefit • Generous benefit or not? • Equality of benefit distribution • Difference between maximum and minimum benefit • Is there redistribution?

  8. Types of public pension systems • Universal or citizenship entitlement • Earnings or social insurance entitlement • Needs-based or means-tested entitlement • Often systems are mixed…

  9. Pension benefit as % of standard of living Source: Pampel (1998) p. 104

  10. Ratio of maximum to minimum benefit

  11. Pension Regimes • Looking at all three criteria • Coverage • Levels • Equality • Some have grouped overall policy strategies (“regimes”) into three types

  12. Social democratic pension regime • Social solidarity • Emphasize collective • Equality in welfare benefits • Examples are Scandinavian countries • http://www.ssa.gov/policy/docs/progdesc/ssptw/2008-2009/europe/sweden.html • http://www.ssa.gov/policy/docs/progdesc/ssptw/2008-2009/europe/netherlands.html

  13. Conservative pension regime • Preserve existing social distinctions • Support based on occupational and industrial position • Examples are Italy, France, Germany • http://www.ssa.gov/policy/docs/progdesc/ssptw/2008-2009/europe/germany.html

  14. Liberal pension regime • Focus on work and earnings • Often a mix of earnings and means-tested programs • Example are U.K., U.S., Canada • http://www.ssa.gov/policy/docs/progdesc/ssptw/2006-2007/americas/canada.html

  15. Why does the U.S. have a “liberal” regime? • Lack of strong, united labor movement • Heterogeneity by region, ethnicity, race • Political parties represent diverse interests • U.S. government structure of checks and balances

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