Explaining the introduction of automatic pension indexation provisions in 17 OECD countries, 1945–2000

Abstract
Previous quantitative research regarding the long expansionary era of public pension generosity has relied mainly on aggregate expenditure data, which capture many pension policy dimensions. Yet, the overall level of national pension generosity may differ from the generosity of each important dimension. To improve our understanding of public pension reforms that increase generosity levels, this study examines the introduction of automatic indexation clauses between 1945 and 2000.

The paper tests predictions of welfare policy development and policy diffusion theories. Using event history methods, we argue that the inflation rate and the incumbency of Christian democratic parties are the main determinants of these policy reforms. Countries with higher inflation rates and more entrenched Christian democratic parties are more likely to link pensions in payment or past wages considered for initial calculation purposes to an economic index. This suggests that political parties differ in their support for each measure that improves pension generosity depending on its expected redistributive impact.