The political sociology of pension reform.

An influential hypothesis in the study of pension politics has been that pensions, once introduced, can never be significantly reduced. A related hypothesis is that reforms are "path-dependent". With regard to pay-as-you-go based pensions, the fact that one generation will have to pay twice (both to finance the pensions of older generations and then to fund their own pensions) was assumed to create a lock-in effect that prevented a shift to funded pensions. Pension reforms during the 1990s and 2000s have weakened both hypotheses. Cost-cutting, path-breaking pension reforms originated in Latin America and have also taken place in Europe. The paper argues that previous theories have a structural bias, and underestimate the impact of political entrepreneurs (conscious agency) in forming and reforming pension systems. Structural factors can make it more or less easy for reformers to gain acceptance, but structural factors only work by influencing how people think and act. How people think and act are psychological and/or sociological questions. The paper identifies factors that facilitated pension reforms in Latin American and European countries, and then use selected examples to show how social psychology and political culture impacted on pension reform processes and outcomes. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]