Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems

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Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems

Author Info

Hassler, J.
Lindbeck, A.

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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.

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Paper provided by Stockholm - International Economic Studies in its series Papers with number 631.

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Length: 37 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:fth:stocin:631

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Related research
Keywords: PENSION FUNDS ; RISK ; GENERATIONS;

Other versions of this item:

Paper
- Hassler, John & Lindbeck, Assar, 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," CEPR Discussion Papers 1774, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Hassler, J. & Lindbeck, A., 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," Research Institute of Industrial Economics Working Papers 493, Research Institute of Industrial Economics (IFN).
- Hassler, John & Lindbeck, Assar, 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," Working Paper Series 493, Research Institute of Industrial Economics. [Downloadable!]
- Hassler, John & Lindbeck, Assar, 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," Seminar Papers 631, Stockholm University, Institute for International Economic Studies. [Downloadable!]

Find related papers by JEL classification:
H5 - Public Economics - - National Government Expenditures and Related Policies
H6 - Public Economics - - National Budget, Deficit, and Debt
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Roger H. Gordon & Hal R. Varian, 1985. "Intergenerational Risk Sharing," NBER Working Papers 1730, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Gordon, Roger H. & Varian, Hal R., 1988. "Intergenerational risk sharing," Journal of Public Economics, Elsevier, vol. 37(2), pages 185-202, November. [Downloadable!] (restricted)
Attanasio, Orazio & Davis, Steven J, 1996. "Relative Wage Movements and the Distribution of Consumption," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1227-62, December. [Downloadable!] (restricted)
Other versions:
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Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
Other versions:
- Martin Feldstein, 1997. "The Missing Piece in Policy Analysis: Social Security Reform," NBER Working Papers 5413, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Hassler, John & Lindbeck, Assar, 1997. "Optimal actuarial fairness in pension systems: A note," Economics Letters, Elsevier, vol. 55(2), pages 251-255, August. [Downloadable!] (restricted)
Other versions:
- Hassler, John & Lindbeck, Assar, 1997. "Optimal Actuarial Fairness in Pension Systems - a Note," Seminar Papers 609, Stockholm University, Institute for International Economic Studies. [Downloadable!]
Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467. [Downloadable!] (restricted)
Smith, Alasdair, 1982. "Intergenerational transfers as social insurance," Journal of Public Economics, Elsevier, vol. 19(1), pages 97-106, October. [Downloadable!] (restricted)
Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec.. [Downloadable!] (restricted)
Bohn, Henning, 1995. "The Sustainability of Budget Deficits in a Stochastic Economy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 257-71, February. [Downloadable!] (restricted)
Other versions:
- Bohn, H., 1990. "The Sutainability Of Budget Deficits In A Stochastic Economy," Weiss Center Working Papers 6-90, Wharton School - Weiss Center for International Financial Research.
Enders, Walter & Lapan, Harvey E, 1982. "Social Security Taxation and Intergenerational Risk Sharing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(3), pages 647-58, October. [Downloadable!] (restricted)
Other versions:
- Enders, Walter & Lapan, Harvey E., 2003. "Social Security Taxation and Inter-generational Risk Sharing," Staff General Research Papers 10822, Iowa State University, Department of Economics.
Olivier Jean Blanchard & Philippe Weil, 1992. "Dynamic Efficiency, the Riskless Rate, and Debt Ponzi Games Under Uncertainty," NBER Working Papers 3992, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Olivier Blanchard & Philippe Weil, 2001. "Dynamic Efficiency, the Riskless Rate, and Debt Ponzi Games under Uncertainty," The B.E. Journal of Macroeconomics, Berkeley Electronic Press, vol. 0(2). [Downloadable!]

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Beetsma, Roel & Bovenberg, A Lans, 2007. "Pension systems, Intergenerational Risk Sharing and Inflation," CEPR Discussion Papers 6089, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Markus Knell, 2005. "On the Design of Sustainable and Fair PAYG Pension Systems When Cohort Sizes Change," Working Papers 95, Oesterreichische Nationalbank (Austrian Central Bank). [Downloadable!]
Beetsma, Roel / Romp, Ward E. / Vos, Siert J., 2008. "Intergenerational Risk Sharing, Pensions and Endogenous Labor Supply in General Equilibrium," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Olivier Rouguet & Pierre Villa, 2000. "Le passage des retraites de la repartition a la capitalisation obligatoire : des simulations a l'aide d'une maquette calibree," Working Papers 2000-02, CEPII research center. [Downloadable!]
Zamac , Jovan, 2005. "Winners and Losers from a Demographic Shock under Different Intergenerational Transfer Schemes," Working Paper Series 2005:13, Uppsala University, Department of Economics. [Downloadable!]
Hans-Werner Sinn, 1998. "The Pay-As-You-Go Pension System as a Fertility Insurance and Enforcement Device," NBER Working Papers 6610, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Sinn, Hans-Werner, 1998. "The Pay-As You-Go Pension System as a Fertility Insurance and Enforcement Device," CEPR Discussion Papers 2023, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Hans-Werner Sinn, 1998. "The Pay-as-you-go Pension System as a Fertility Insurance and Enforcement Device," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Eduardo Siandra, 1998. "Sistemas de pensiones, sus reformas y los mercados de capitales," Documentos de Trabajo (working papers) 0299, Department of Economics - dECON. [Downloadable!]
Juergen Jung, 2008. "The Timing of Redistribution," Caepr Working Papers 2008-015, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
Assar Lindbeck, 2002. "Pensions and Contemporary Socioeconomic Change," NBER Chapters, in: Social Security Pension Reform in Europe, pages 19-48 National Bureau of Economic Research, Inc. [Downloadable!]
Pierre Villa, 2004. "Typologie et equivalence des systemes de retraites," Working Papers 2004-09, CEPII research center. [Downloadable!]
Jovan Zamac, 2005. "Pension Design when Fertility Fluctuates: The Role of Capital Mobility and Education Financing," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Egil Matsen & Øystein Thøgersen, 2000. "Designing Social Security – A Portfolio Choice Approach," Working Paper Series 1102, Department of Economics, Norwegian University of Science and Technology. [Downloadable!]
Other versions:
- Matsen, E. & Thogersen, O., 2001. "Designing Social Security - A Portfolio Choice Approach," Papers 21/2001, Norwegian School of Economics and Business Administration-.
- Matsen, Egil & Thogersen, Oystein, 2004. "Designing social security - a portfolio choice approach," European Economic Review, Elsevier, vol. 48(4), pages 883-904, August. [Downloadable!] (restricted)
Ennio Bilancini & Massimo D'Antoni, 2008. "Pensions and Intergenerational Risk-Sharing When Relative Consumption Matters," Department of Economics University of Siena 541, Department of Economics, University of Siena. [Downloadable!]
Lindbeck, Assar, 2001. "Pensions and Contemporary Socioeconomic Change," Working Paper Series 548, Research Institute of Industrial Economics. [Downloadable!]
Other versions:
- Assar Lindbeck, 2000. "Pensions and Contemporary Socioeconomic Change," NBER Working Papers 7770, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Lindbeck, Assar, 2000. "Pensions and Contemporary Socioeconomic Change," Seminar Papers 685, Stockholm University, Institute for International Economic Studies. [Downloadable!]
- Lindbeck, A., 2001. "Pensions and Contemporary Socioeconomic Change," Research Institute of Industrial Economics Working Papers 548, Research Institute of Industrial Economics (IFN).

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