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PAYG pensions and endogenous retirement revisited

Author

Listed:
  • Joachim Thøgersen

    (University of South-Eastern Norway, USN School of business)

Abstract

This paper presents an OLG model with endogenous retirement and endogenous growth. The purpose is to show analytically the effects of a PAYG pension system on the economy in such a setting. Firstly, it is shown that a PAYG system is neutral in capital intensity. Secondly, we analytically characterize the conditions that determine the effect of a PAYG system on welfare, and show that a PAYG system can be welfare improving. Thirdly, the analysis and the results apply to a non-steady-state equilibrium path. growth. The purpose is to show analytically the effects of a PAYG pension system on the economy in such a setting. Firstly, it is shown that a PAYG system is neutral in capital intensity. Secondly, we analytically characterize the conditions that determine the effect of a PAYG system on welfare, and show that a PAYG system can be welfare improving. Thirdly, the analysis and the results apply to a non-steady-state equilibrium path.

Suggested Citation

  • Joachim Thøgersen, 2022. "PAYG pensions and endogenous retirement revisited," Economics Bulletin, AccessEcon, vol. 42(4), pages 1826-1835.
    • Handle: RePEc:ebl:ecbull:eb-22-00332
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I4-P152.pdf
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    References listed on IDEAS

    as
    1. Philippe Michel & Pierre Pestieau, 2013. "Social Security And Early Retirement In An Overlapping-Generations Growth Model," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 723-737, November.
    2. Miyazaki, Koichi, 2019. "Optimal Pay-As-You-Go Social Security With Endogenous Retirement," Macroeconomic Dynamics, Cambridge University Press, vol. 23(2), pages 870-887, March.
    3. Liu, Pan & Thøgersen, Joachim, 2020. "Pay-As-You-Go Pensions And Endogenous Retirement," Macroeconomic Dynamics, Cambridge University Press, vol. 24(7), pages 1700-1719, October.
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    Keywords

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    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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