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Working paper

Intergenerational contracts and time inconsistency: Implications for policy settings and governance in the social welfare system? (WP 13/25)

Issue date: 
Wednesday, 18 December 2013
Status: 
Current
View point: 
Document Date: 
Publication category: 
JEL classification: 
H23 - Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H55 - Social Security and Public Pensions
I38 - Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
ISBN: 
978-0-478-40373-2

Formats and related files

In this paper, we explore the question of the sustainability of the intergenerational contract that is represented by the current structure of social welfare.

Abstract

In this paper we explore the question of the sustainability of the intergenerational contract that is represented by the current structure of social welfare. We argue that sustainability and time consistency of social welfare policies could be improved by more explicit recognition of the social welfare system as a relational contract that should be reinterpreted in the light of changes in technology, changes in our understanding of the incentive effects of different approaches to social welfare provision, and changes in society as a whole. We suggest that too much of our social welfare policy is based on approaches developed under the social and economic conditions and technology of the past, and that this is a key source of the potential challenge to the sustainability of current policies.

This Working Paper is available in Adobe PDF and HTML. Using PDF Files

Acknowledgements

The authors acknowledge helpful comments from members of the New Zealand Treasury Long Term Fiscal Planning Group, and referees, Arthur Grimes, Kirsten Jensen, Becky Prebble, and Graham Scott.

Disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury or the New Zealand Government. The New Zealand Treasury and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

Last updated: 
Thursday, 19 December 2013