The welfare effects of pay-as-you-go retirement programs: the role of tax and benefit timing
AbstractIt is well known that pay-as-you-go retirement programs reduce steady-state welfare and the capital stock in dynamically efficient OLG economies. The common two-period OLG model obscures, however, the dependence of these effects on the ages at which taxes are paid and benefits are received. Program changes that shift taxes to older workers or benefits to younger retirees have effects similar to reductions in program size, yielding steady-state welfare gains and increases in capital accumulation while imposing transition costs on current generations. This analysis has policy implications for both tax and benefit timing.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 0602.
Date of creation: 2006
Date of revision:
Other versions of this item:
- Alan D. Viard, 2007. "The Welfare Effects Of Pay-As-You-Go Retirement Programs: The Role Of Tax And Benefit Timing," Contemporary Economic Policy, Western Economic Association International, vol. 25(2), pages 282-292, 04.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-26 (All new papers)
- NEP-DGE-2006-08-26 (Dynamic General Equilibrium)
- NEP-LAB-2006-08-26 (Labour Economics)
- NEP-PBE-2006-08-26 (Public Economics)
- NEP-PUB-2006-08-26 (Public Finance)
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