Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/126625
Authors: 
Bachmann, Andreas
Wüthrich, Kaspar
Year of Publication: 
2015
Series/Report no.: 
Discussion Papers, Universität Bern, Department of Economics 15-07
Abstract: 
This paper proposes a method for the welfare analysis of pay-as-you-go social security systems. We derive a formula for the welfare consequences of a permanent marginal change in the payroll tax rate that is valid under weak assumptions about the deep structure of the economy. Our approach requires neither a full specification of preferences and technology, nor knowledge of the individual savings behavior. Instead of parameterizing and calibrating the deep model structure, we implement our formula based on reduced form estimates of a VAR model. We apply our method to evaluate the social security system in the United States.
Subjects: 
social security system
overlapping generations
optimal payroll taxes
welfare analysis
reduced form VAR
JEL: 
E62
H55
Document Type: 
Working Paper

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