Ruhr Economic Papers
Ruhr Economic Papers #238
Old Times, Better Times? German Miners’ Knappschaften, Pay-as-you-go Pensions, and Implicit Rates of Return, 1854–1913
by Tobias Alexander Jopp
RWI, 01/2011, 38 S./p., 8 Euro, ISBN 978-3-86788-272-9download
This paper contributes to the literature on the weakness of modern pay-as-you-go social security systems in financing pensions by taking a business and economic historical perspective on the issue. It focuses on Prussian Knappschaften (plural of Knappschaft), which provided miners with compulsory invalidity and implicit old-age insurance, and studies the period from 1854 to 1913. Knappschaften used the pay-as-you-go mechanism, and, in the long-term, came under financial pressure by the rising number of pensioners. The question to be answered is whether Knappschaften were able to off er cohorts of miners entering the system at diff erent times the same implicit rates of return. Did Knappschaften provide an intergenerationally sustainable policy, or did adjustments of contributions and other parameters decrease the dividend for insured miners over time?
JEL-Classification: N33, N83, H53, H55
Keywords: Insurance; implicit rates of return; Knappschaft; mining; pay-as-you-go; pensions; Prussia; welfare state
Jopp, T. Alexander (2011), Old Times, Better Times? German Miner's Knappschaften, Pay-as-you-go Pensions, and Implicit Rates of Return, 1854–1913. Business History 53 (7): 1018-1043.