Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81275
Authors: 
Lindbeck, Assar
Persson, Mats
Year of Publication: 
2002
Series/Report no.: 
IUI Working Paper 580
Abstract: 
We characterize pension systems along three dimensions: 1) actuarial vs. non-actuarial, 2) funded vs. pay-as-you-go, 3) defined-contribution vs. defined-benefit. Increasing the degree of actuarial fairness, by strengthening the linkage between contributions and benefits, reduces labor market distortions and may increase welfare in a Pareto-efficiency sense. Increasing the degree of funding implies mainly a redistribution of income among generations, although a partial shift to funding also provides better risk-return combinations for individuals. Shifting from defined-benefit to defined-contribution schemes (with fixed contribution rates) shifts the income risk from workers and taxpayers to pensioners.
Subjects: 
Social security
Funding
JEL: 
H55
Document Type: 
Working Paper

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