Internal Rates of Return of the German StatutoryLong-Term Care Insurance

Presuming an ageing population, every introduction of a pay-as-you-go schemecauses intergenerational redistribution in favor of the first generations and to theburden of young and future generations. Using the concept of internal rates ofreturn we want to examine the extent to which the first generations drew an introductorybenefit from the implementation of the German statutory long-term careinsurance as an unfunded system. Furthermore, a comparison between the internalrates of return will show firstly to what extent different generations are burdenedby having to redeem the implicit debt, and secondly which generations are involvedin paying back the introductory gain....