Advanced Search
MyIDEAS: Login to save this article or follow this journal

Pareto Efficient Pay-as-You-Go Pension Systems with Multi-Period Lives

Contents:

Author Info

  • Matthias Wrede

    (Uni Bamberg)

Abstract

This paper employs a three-period-overlapping generations model to discuss intergenerational (in-)efficiency of a PAYG system when labor supply is endogenous. Four main results will be derived. First, a pension system is (constrained) efficient if the existing system itself and reforms are restricted to guarantee that benefits are proportional to contributions in present value terms. Second, the result does not carry over to other pension systems where the benefits of a retiree are proportional to weighted individual contributions. Third, if the actual PAYG scheme is not a second-best-optimum for some generations, a welfare improving reform is possible provided that the government is not restricted to systems with partial equivalence of contributions and benefits in present value terms. A Pareto-improving transition from the PAYG system to a fully funded system might become feasible provided that the change in the pension scheme is accompanied by an adequate compensating redistribution among generations. Fourth, partial equivalence in present value terms, which requires uniform benefit-adjusted taxation of labor income, does not ensure intergenerational efficiency in all circumstances. However, if uniform benefit-adjusted taxation were optimal, a pension system like the German PAYG system would not be intergenerationally efficient since it misses partial equivalence in present value terms.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.wiso-net.de/webcgi?START=A60&DOKV_DB=ZWIW&DOKV_NO=ECON310821592&DOKV_HS=0&PP=1
File Function: Main text
Download Restriction: Access via GENIOS - German Business Information - http://www.genios.de/r_startseite/index.ein

File URL: http://search.ebscohost.com/login.aspx?direct=true&db=ecn&AN=0511517&site=ehost-live
File Function: Main text
Download Restriction: Access via EBSCOhost Econlit - http://www.ebscohost.com/

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 219 (1999)
Issue (Month): 3+4 (September)
Pages: 494-503

as in new window
Handle: RePEc:jns:jbstat:v:219:y:1999:i:3-4:p:494-503

Contact details of provider:
Postal: Licher Straße 74, 35394 Gießen
Phone: +49 (0)641 99 22 001
Fax: +49 (0)641 99 22 009
Web page: http://wiwi.uni-giessen.de/home/oekonometrie/Jahrbuecher/
More information through EDIRC

Related research

Keywords: Pay-as-you-go pension system; overlapping-generations model; intergenerational efficiemncy;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Damjanovic, Tatiana, 2003. "The possibility of Pareto-Improving Pension Reform: More Arguments," Royal Economic Society Annual Conference 2003 53, Royal Economic Society.
  2. Sinn, Hans-Werner, 2000. "Why a Funded Pension System is Useful and Why It is Not Useful," Munich Reprints in Economics 19859, University of Munich, Department of Economics.
  3. Hans-Werner Sinn, 1999. "Pension Reform and Demographic Crisis: Why a Funded System is Needed and why it is not Needed," CESifo Working Paper Series 195, CESifo Group Munich.
  4. Martin Werding, 2007. "Versicherungsmathematisch korrekte Rentenabschläge für die gesetzliche Rentenversicherung," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 60(16), pages 19-32, 08.
  5. Tatiana Damjanovic, 2006. "On The Possibility Of Pareto-Improving Pension Reform," Manchester School, University of Manchester, vol. 74(6), pages 711-724, December.
  6. Robert Fenge & Silke Uebelmesser & Martin Werding, 2002. "Second-best Properties of Implicit Social Security Taxes: Theory and Empirical Evidence," CESifo Working Paper Series 743, CESifo Group Munich.
  7. Mathias Kifmann, 2008. "Age-Dependent Taxation and the Optimal Retirement Benefit Formula," German Economic Review, Verein für Socialpolitik, vol. 9, pages 41-64, 02.
  8. Hans-Werner Sinn, 2000. "Why a Funded Pension System is Needed and Why It is Not Needed," International Tax and Public Finance, Springer, vol. 7(4), pages 389-410, August.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:219:y:1999:i:3-4:p:494-503. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Winker).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.