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Title:Labor income risk, demographic risk, and the design of (wage-indexed) social security PDF Logo
Authors:Borgmann, Christoph
Issue Date:2002
Series/Report no.:Diskussionsbeiträge, Institut für Finanzwissenschaft der Albert-Ludwigs-Universität Freiburg im Breisgau 100
Abstract:Pay-as-you-go pension programs can help to share risk amongst generations. While a wage-indexed pension program is best suited to share labor income risk, I show that the combination of stochastic labor income and stochastic population growth may reduce the possibilities for intergenerational risk sharing: Labor income risk can only be shared when individuals are also exposed to demographic risk. For demographic uncertainty the usual categorization of pension programs does not suffice. I therefore introduce policies on how the demographic uncertainty is transmitted via social security. An optimal demographic indexation is derived for a small open economy and a closed economy.
Subjects:intergenerational risk sharing
social security
demography
Persistent Identifier of the first edition:urn:nbn:de:bsz:25-opus-18711
Document Type:Working Paper
Appears in Collections:Diskussionsbeiträge, Inst. f. Finanzwissenschaft, Universität Freiburg

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