Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25454
Authors: 
Krueger, Dirk
Kubler, Felix
Year of Publication: 
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
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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