EUROPEAN PAPERS ON THE NEW WELFARE

The European Social Pension: A Theoretical Exercise

4. Conclusions

International economics suggest that the free trade of goods and services or alternatively free flows of capital may be sufficient to lead to equalized factor prices and maximize welfare. However, in the real world of externalities and imperfect competition, it is quite likely that the performance of all markets needs to be improved and integrated more strongly, and improvement of welfare requires some type of redistribution. The attainment of such goals requires political processes and second-best policies.
In the Age of Globalization the European Union has only one option: to move forward to some type of political union; otherwise, the prospects of the common currency union will be undermined by social and economic tensions. Today all other common currency areas have some type of federal political system in place, to balance the political and economic trade-offs.
It is suggested that the establishment of the European Social Pension will be a turning point in the historical evolution of the EU toward a political union. The proposed scheme will tout the message across the Union that the policy of redistribution, mainly through, the structural funds, is being gradually supplemented by social policies that aim to improve the quality of life of those citizens in greatest need. And the first priority is given to the reduction of poverty among the retiring generations of pensioners, who were the founders of the European Union.
In the 21st century the EU needs a strong narrative about the Union’s core identity that will engage people in European affairs. The European Social Pension will certainly signal the ‘new beginning’ the EU needs.

References

Atkinson, A.B. (1995): Incomes and the Welfare State: Essays on Britain and Europe, Cambridge University Press, Cambridge.

Atkinson, A.B. (1998): Poverty in Europe, Basil Blackwell, Oxford.

Atkinson, T., Bourguignon, F., O’Donoghue, C., Sutherland, H., and Utili, F. (2002): “Microsimulation of Social Policy in the European Union: Case Study of a European Minimum Pension, Economica, vol. 69, pp. 229-243.

Dreze, J. (2002): “Economic and Social Security in the Twenty-first Century, with Attention to Europe”, Scandinavian Journal of Economics, vol. 102(3), pp. 327-348.

Forni, M. and Reichlin, L. (1999): “Risk and Potential Insurance in Europe”, European Economic Review, vol. 43, pp. 1237-1256.

Holzmann, R., (2006): “Toward a Coordinated Pension System in Europe: Rationale and Potential Structure”, in Pension Reform, edited by R. Holzmann and E. Palmer, The World Bank, Washington, D. C.

Lindbeck, A. and Persson, M., (2003): “The Gains from Pension Reform”, Journal of Economic Literature, vol. XLI (March), pp.74-112.

Sinn, H., (1990): “ Tax Harmonization on Tax Competition in Europe”, European Economic Review, vol.34, pp. 489-504.

Sinn, H., (1998): “European Integration and the Future of the Welfare State”, Swedish Economic Policy Review, vol. 5, pp. 113-132.

Sutherland, H. (ed.), (1997): The EUROMOD Preparatory Study: A Summary Report. Microsimulation Unit Discussion Paper MU9705, Department of Applied Economics, University of Cambridge.


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