A Role for Universal Pension? Simulating Universal Pensions in Ecuador, Ghana,Tanzania and South Africa

Abstract

We use four novel, crosscountry comparable tax-bene t microsimulation models for Ecuador, Ghana, Tanzania and South Africa to analyse ex ante the expansion of a universal old-age pension in a static setting. Universal pensions would signi cantly reduce poverty and inequality in settings where no means-tested old-age pensions exist (such as in Ghana and Tanzania). If means-tested old-age pensions exist and shall be maintained, universal pensions as a top up scheme only make a di ference for the income distribution if the existing schemes do not reach the entire vulnerable population such as in Ecuador. Costs for the proposed schemes are substantial.

Microsimulation analysis of the impact of indirect tax benefits on income distribution and poverty alleviation in Tanzania: An application of TAZMOD

“…Poverty alleviation and the reduction of income inequality are often the main motivations for the introduction of tax-benefit reforms (Jouste and Rattenhuber 2018). This supports the results of both reforms.…”

Exploring options for a universal old age pension in Tanzania Mainland

“…These amounts are higher than used by Jouste and Rattenhuber (2019) for their simulations of an almost-universal old age pension for Tanzania Mainland. Using a 2012 timepoint, they tested benefits that were pegged at the value of 50 per cent of three thresholds (the basic needs poverty line, the food poverty line, and the World Bank US$3.1 per day threshold) and assigned the benefits to older people who were not already in receipt of pension income.…”

“…Using TAZMOD, it is possible not only to simulate the current tax and benefit arrangements but also to test various reform scenarios to explore the first order effect of the reforms compared to the actual tax and benefit arrangements that were in place in July 2018. As such, it builds on the comparative paper by Jouste and Rattenhuber (2019), in which several universal pensions are simulated for Ecuador, Ghana, Tanzania Mainland, and South Africa, and on a paper by , in which a universal old age benefit was simulated for Tanzania Mainland that replaced the current PSSN benefits.…”

“…Underinvestment and lack of financing are other crucial reasons for low social protection coverage in SSA countries (Jouste and Rattenhuber 2019). An inability to access social protection leaves people vulnerable to poverty, inequality, and social exclusion across the life cycle, thereby constituting a major obstacle to economic transformation and social development.…”

Unemployment insurance and income protection in Ecuador

“…ECUAMOD is used to simulate the main tax and benefit components of household disposable income in Ecuador, where household disposable income is defined as the sum of market income plus social cash transfers minus income tax and social insurance contributions. Simulation results for ECUAMOD have been validated both at the micro and macro level (see Jara et al 2017) and the model has been used in recent empirical studies by Bargain et al (2017), Jara and Varela (2018), Jouste and Rattenhuber (2018).…”