Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/21098
Authors: 
van Praag, Bernard M. S.
Cardoso, Pedro
Year of Publication: 
2001
Series/Report no.: 
IZA Discussion paper series 249
Abstract: 
Feldstein [1985] posed the questions of what would be the optimal level of retirement benefit, and what would be the optimal mix between the pay-as-you-go system and the funded pension system under the assumption of an exogenous interest rate. We reconsider the problem with the addition of a flexible production function and, consequently, an endogenous interest rate. Moreover, we allow the contributions rate O to be negative as well. In the case of a negative O, the retired subsidize the workers out of their saved capital. This case turns out to be the optimal one in situations of low population growth.
Subjects: 
Social security
pay-as-you-go systems
funded pensions
retirement benefits
welfare systems
JEL: 
E21
D91
J26
J14
H55
Document Type: 
Working Paper

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