ABSTRACT

The development of social security programmes aimed at the elderly – pensions, health, disability – and the reduction of poverty at old age are among the most striking features of modern welfare states. A social planner maximizing a utilitarian social welfare function would surely behave that way. However, our social policy is not just designed by social planners; it needs political support and as we will see, political support implies that to help the poor we need programmes that cater to everyone and that are thus contributive. The main idea of this chapter is that social protection has to be contributory if it wants to reduce poverty. It presents two indicators of generosity for the years 1995 and 2000 and an indicator of contributiveness. First, there is the indicator of average generosity measured by the ratio of pension spending to GDP. The second is an indicator of poverty alleviation that is the difference between poverty before and after transfers.