Fölster, Stefan Gidehag, Robert Orszag, Jonathan Michael Snower, Dennis J.
Year of Publication:
CEPR Discussion Paper Series, Centre for Economic Policy Research (CEPR), London 3479
The Paper examines the possible effects of introducing a large-scale welfare reform in Sweden, namely, the introduction of comprehensive welfare accounts. Under this policy, individuals make mandatory contributions to accounts, which they can top up with voluntary contributions. In return, individuals’ welfare benefits are paid from their accounts. The Paper uses a large panel of individual income data to examine how the adoption of universal welfare accounts may affect economic activity. We find that this policy could be designed so as to reduce social insurance expenditure considerably, improve the incentives to work and save, all with relatively small redistributive impact.