On the Measurement of Intra-Generational Lifetime Redistribution in Pension Systems

Abstract

It is known that existing measures of intra-generational (within cohorts) redistribution induced by pension schemes may prove highly misleading in the presence of inter-generational (between cohorts) redistribution. In this paper we show that the Kakwani progressivity index, extended to account for both positive and negative individual tax liabilities, is a non-distorted measure of intra-generational redistribution in pension systems. The relevance of the distortion induced by inter-generational transfers is empirically shown in the comparison between pre- and post-reform Italian pension schemes from 1992 to 2004.