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2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)
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2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institutions (Presentation 1)

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  • 1. Vulnerability of Social Institutions Falilou FALL OECD Economics Department New Approaches to Economic Challenges Seminar on Project C2, 18 March 2014 1
  • 2. • Role and functions of social institutions • Social institutions and the crisis • Institutional design influences their vulnerabilities – country specificities • The scope of the analysis: pension, health care and unemployment insurance (UI) • Balance between sustainability and adequacy • Outline: – Trend and long run changes: ageing and productivity – Macro shocks and UI – Policy recommendations 2 Introduction and outline
  • 3. • Shocks – Sustainability – Reforms - Adequacy • What are the critical drivers of vulnerabilities and the sensitivity to risks? • How do the different shocks affect the sustainability of social institutions? • Institutional capacity to cope with shocks and risks • Adequacy and impact of reforms 3 The framework Adaptive and recovery capacity Risk prevention Shocks Impact on promises and costs of meeting them
  • 4. • Ageing Figure 1: OECD old-age support ratio will decrease from 4.2 currently to 2.1 in 2050 4 Long-term risks and trends and their effects on social institutions 0 2 4 6 8 10 12 Difference 2050-2010 2050 Source: OECD (2013), Pensions at a Glance 2013
  • 5. 5 Ageing and health care systems 0 2 4 6 8 10 12 14 16 Baseline Morbidity compression Morbidity expansion Figure 2: Health status in old age affects public health care spending Source: OECD calculations and de la Maisonneuve and Oliveira Martins (2013).
  • 6. 6 Ageing and pension systems 0 2 4 6 8 10 12 14 16 18 20 2010 2050 Source: OECD (2013), Pensions at a Glance 2013 Figure 3: Public pension expenditure projections
  • 7. 7 The impact of a longevity shock on a PAYG defined benefit scheme Source: OECD simulations Figure 4: Simulation of the impact of a longevity shock on DB scheme
  • 8. 8 Ageing, social spending and fiscal consolidation Figure 5: The impact of future health and pension spending on consolidation needs Source: Cournède, B. et al. (2013), Pensions at a Glance 2013 and de la Maisonneuve and Oliveira-Martins (2013).
  • 9. • Health spending, price and technology developments 9 Productivity developments and social institutions Source: de la Maisonneuve and Oliveira Martins (2013). Figure 6: Price and technological developments affect the public health spending-to-GDP ratio
  • 10. 10 Productivity changes and pension schemes Source: OECD simulations Figure 7: The effect of a productivity growth slowdown on a DB scheme
  • 11. 11 Macroeconomic shocks and unemployment insurance 11 Figure 8: Evolution of the NAIRU during the crisis -8 -6 -4 -2 0 2 4 Change in Nairu 2006-08 Change in Nairu 2009-12 Source: EO93 database, OECD Social Expenditure database, OECD calculations.
  • 12. Figure 9: Unemployment rate and volatility 12 Source: EO93 database, OECD Social Expenditure database, OECD calculations.
  • 13. Figure 10: Unemployment insurance spending elasticity to unemployment Figure 11: Spending asymmetries over the cycle 13 -3 -2 -1 0 1 2 3 -8 -4 0 4 8 12 Source: EO93 database, OECD Social Expenditure database, OECD calculations.
  • 14. – Pension schemes, ageing and risks (interest rate, asset price and longevity). – Pension reform levers : retirement age, contribution rate and pension rate. – Adjusting key parameters automatically to life expectancy. – Widening the coverage of voluntary private pensions as a complement to public pensions. Figure 12: Poverty among older people (2010, people older than 65 years ) 14 0 5 10 15 20 25 30 35 40 45 50 All 65+ Whole population Source: OECD Income Distribution and Poverty Database. Overcoming vulnerabilities of pension systems
  • 15. – Health care spending drivers : ageing, price and technology developments. – Policy options for reducing spending: higher cost sharing and tax incentives for private health insurance curb public spending, but worsen adequacy. – Supply side policies: regulated competition, well-designed budgetary caps, hospital payments (diagnostic related groups and health technology assessments). – Greater efficiency and spending savings. Figure 13: Degree of cost sharing 15 Overcoming vulnerabilities of health care systems 0 0.5 1 1.5 2 2.5 3 3.5 NLD LUX FRA IRL GBR USA USA DEU CZE DNK CAN NZL JPN NOR AUT SWE ISL AUS BEL FIN TUR ITA ESP PRT POL HUN SVK CHE KOR GRC MEX Source: OECD Survey on Health System Characteristics 2008-09.
  • 16. – Generous benefits can lead to large spending spikes. – Unemployment insurance adequacy in crisis times. – Effective activation policies can increase UI efficiency. – Contingency plans to adjust policies during crises should be in place. Figure 14: The responsiveness of active labour market policies to unemployment 16 Overcoming vulnerabilities of unemployment insurance (UI) AUS AUT BEL CAN CHE CZE DEU DNK ESP EST FIN FRA HUN IRL ISR ITA JPN KOR LUXMEX NLD NZL POL PRT SVK SVNSWE USA -50 0 50 100 150 200 250 300 -50 0 50 100 150 200 250 300 350 400 ALMP expenditure scaled by GDP per capita, per cent change 2007-10 Unemployment, per cent change 2007-10 45o Source: OECD Social Expenditure Database.
  • 17. THANK YOU

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