Pareto improving social security reform when financial markets are incomplete!?
- 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. Klassifikation: E62, H55, H31, D91, D58 . April 2005.
| Author: | Dirk KruegerORCiDGND, Felix Kubler |
|---|---|
| URN: | urn:nbn:de:hebis:30-10881 |
| Parent Title (German): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2005,12 |
| Series (Serial Number): | CFS working paper series (2005, 12) |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2005 |
| Year of first Publication: | 2005 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2005/06/13 |
| Tag: | Aggregate Fluctuations; Incomplete Markets; Intergenerational Risk Sharing; Social Security Reform |
| GND Keyword: | Sozialversicherung; Reform |
| Issue: | April 2005 |
| HeBIS-PPN: | 197307493 |
| Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Licence (German): |  Deutsches Urheberrecht |
