Pareto-Improving Social Security Reform when Financial Markets Are Incomplete!?
نویسندگان
چکیده
منابع مشابه
Pareto Improving Social Security Reform when Financial Markets are Incomplete!?¤
This paper studies an overlapping generations model with stochastic production and incomplete markets to assess whether the introduction of an unfunded social security system leads to a Pareto improvement. When returns to capital and wages are imperfectly correlated a system that endows retired households with claims to labor income enhances the sharing of aggregate risk between generations. Ou...
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Financial innovation in an existing asset generically supports a Pareto improvement, targeting the income effect. This result, as several on taxation, owes to one unifying notion: that an intervention generically supports Pareto improvements if the implied price adjustment is sufficiently sensitive to the economy’s risk aversion. Elul (1995) and Cass and Citanna (1998) introduce financial innov...
متن کاملSocial Security Reform and Financial Markets
Social Security is in trouble. With declining population growth and rising life expectancy, the cost of Social Security benefits is rising relative to payroll tax revenues. As a result, the Social Security retirement fund is expected to run out around 2030.1 Recently, the 1994–1996 Advisory Council on Social Security (1997) proposed three different plans to address the problem. Interestingly, a...
متن کاملIntergenerational Risk Sharing via Social Security when Financial Markets are Incomplete¤
This paper develops an overlapping generations model with stochastic production and incomplete markets to assess whether the introduction of an unfunded social security system can lead to a Pareto improvement, even if the initial equilibrium is neither production-ine±cient in the spirit of Diamond (1965) nor dynamically ine±cient in the spirit of Samuelson (1957). When returns to capital and wa...
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The paper discusses whether a Pareto-improving cut back of a pay-as-you-go (PAYGO) system of social security is feasible if there is an altruistic motive for making positive bequests. The paper argues that this cut back is possible if the PAYGO system relies on distorting labor taxes. Even in the case when only a fraction of the current old have an altruistic bequest motive it may be possible t...
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ژورنال
عنوان ژورنال: American Economic Review
سال: 2006
ISSN: 0002-8282
DOI: 10.1257/aer.96.3.737