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http://hdl.handle.net/10419/25454
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| Title: | | Pareto improving social security reform when financial markets are incomplete!?  |
| Authors: | | Krueger, Dirk Kubler, Felix |
| Issue Date: | | 2005 |
| Series/Report no.: | | CFS Working Paper 2005/12 |
| Abstract: | | 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. Our quantitative analysis shows that, abstracting from the capital crowding-out effect, the introduction of social security represents a Pareto improving reform, even when the economy is dynamically effcient. However, the severity of the crowding-out effect in general equilibrium tends to overturn these gains. |
| Subjects: | | Social Security Reform Aggregate Fluctuations Intergenerational Risk Sharing Incomplete Markets |
| JEL: | | E62 H55 H31 D91 D58 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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