Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94908
Authors: 
Hassler, John
Lindbeck, Assar
Year of Publication: 
1997
Series/Report no.: 
IUI Working Paper 493
Abstract: 
In an analysis of the risk-sharing properties of different types of pension systems, we show that only a fixed-fee pay-as-you go (PAYG) pension systems can provide intergenerational risk sharing for living individuals. Under some circumstances, however, other PAYG pension systems can enhance the expected welfare of all generations by reducing intergenerational income variability. We derive conditions for this to occur. We also analyze the stability of actuarially fair PAYG pension systems. It is shown that if an actuarially fair pension with a non-balanced budget system is dynamically stable, its accumulated surpluses will converge to the same fund as in a fully funded system. We also show that the welfare loss due to labor market distortions will, surprisingly, increase if the implicit marginal return in a compulsory system is raised above the average return.
Subjects: 
Pension systems
Pay-as-you-go
Intergenerational
JEL: 
H50
H55
H60
Document Type: 
Working Paper

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