ANNUAL VERSUS LIFETIME INCOME-REDISTRIBUTION BY SOCIAL-SECURITY

In this study we compare the redistributive impact of the Dutch social security on an annual basis with the lifetime redistributive impact. The analysis confirms the theoretical notion that the lifetime impact is smaller than the annual incidence studies suggest. This holds espec ially for old-age pensions and social assistance and, to a lesser exte nt, the disability state pension. We also find that, for the Netherlan ds, the younger the cohort is, the larger the difference. However, emp loyee insurances do not necessarily imply a smaller redistributive imp act on a lifetime basis. The results are of course affected by the dis count rate used and the assumptions with respect to economic growth. T he discount rate generally appears to be negatively correlated with th e redistributive impact, whereas the effect of growth is less straight forward. (C) 1998 Elsevier Science S.A.