Social Security with Heterogeneous Populations Subject to Demographic Shocks
AbstractIn a previous paper, we showed how a pay-as-you-go social security scheme, based on voluntary contributions, can be an appropriate institution to reach an optimal sharing of risks among generations in the presence of demographic uncertainties. We study here the functioning of such schemes when there are different population strata, with different demographic shocks and wages. We show that while a collective voluntary pay-as-you-go scheme can provide efficient intergenerational risk sharing, it is likely to be destabilized by pensions funds specialized by agents' types. This is true both when there is a complete set of contingent markets, where the risk pooling capabilities of a collective fund are potentially of less interest, and when markets are incomplete. In this last circumstance, a collective fund may help the living agents to share their intragenerational risks. However, we show that the resulting allocation does not Pareto dominate the outcome of individual funds by agent types, and that there are incentives for agents to separate from any collective organization. The Geneva Papers on Risk and Insurance Theory (2001) 26, 5–24. doi:10.1023/A:1011214423209
Download InfoIf 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.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal The Geneva Papers on Risk and Insurance Theory.
Volume (Year): 26 (2001)
Issue (Month): 1 (June)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
Other versions of this item:
- Demange, G. & Laroque, G., 1997. "Social Security with heteregeneous populations subject to demographic shocks," DELTA Working Papers 97-08, DELTA (Ecole normale supérieure).
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Roel Beetsma & Ward Romp & Siert J. Vos, 2011.
"Voluntary Participation and Intergenerational Risk Sharing in a Funded Pension System,"
Tinbergen Institute Discussion Papers
11-056/2/DSF19, Tinbergen Institute.
- Beetsma, Roel M.W.J. & Romp, Ward E. & Vos, Siert J., 2012. "Voluntary participation and intergenerational risk sharing in a funded pension system," European Economic Review, Elsevier, vol. 56(6), pages 1310-1324.
- Beetsma, Roel & Romp, Ward E & Vos, Siert-Jan, 2011. "Voluntary participation and intergenerational risk sharing in a funded pension system," CEPR Discussion Papers 8312, C.E.P.R. Discussion Papers.
- Roel Beetsma & Ward Romp, 2013. "Participation Constraints in Pension Systems," Tinbergen Institute Discussion Papers 13-149/VI, Tinbergen Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.