IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v53y2000i1p41-58.html
   My bibliography  Save this article

Investing Social Security in the Equity Market. Does It Make a Difference?

Author

Listed:
  • Pestieau, Pierre
  • Possen, Uri M.

Abstract

We show that investing social security in the equity market makes no difference under three assumptions: (1) the transition generation is compensated by public borrowing, (2) the benefit rule is unchanged, and (3) individuals’ portfolio choices are unconstrained. We also show that when these assumptions do not hold, the reform is not neutral; it can be Pareto improving but it can also be Pareto worsening. This depends particularly on the way portfolio choices are constrained. For example, if a majority of households are kept away from the equity market because of liquidity constraints, investing part of their contributions in the equity market can be Pareto improving.

Suggested Citation

  • Pestieau, Pierre & Possen, Uri M., 2000. "Investing Social Security in the Equity Market. Does It Make a Difference?," National Tax Journal, National Tax Association, vol. 53(1), pages 41-58, March.
  • Handle: RePEc:ntj:journl:v:53:y:2000:i:1:p:41-58
    as

    Download full text from publisher

    File URL: https://www.ntanet.org/NTJ/53/1/ntj-v53n01p41-58-investing-social-security-equity.pdf
    Download Restriction: no

    File URL: https://www.ntanet.org/NTJ/53/1/ntj-v53n01p41-58-investing-social-security-equity.html
    Download Restriction: no

    References listed on IDEAS

    as
    1. Henry J. Aaron & John B. Shoven, 1999. "Should the United States Privatize Social Security?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011743 edited by Benjamin M. Friedman, January.
    2. Pascal Belan & Pierre Pestieau, 1999. "Privatizing Social Security: A Critical Assessment," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 24(1), pages 114-130, January.
    3. Peter A. Diamond, 1997. "Macroeconomics Aspects of Social Security Reform," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 1-88.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Ebrahim, M. Shahid & Mathur, Ike & ap Gwilym, Rhys, 2014. "Integrating corporate ownership and pension fund structures: A general equilibrium approach," Journal of Banking & Finance, Elsevier, vol. 49(C), pages 553-569.
    2. repec:eee:hapoch:v1_781 is not listed on IDEAS
    3. Axel Börsch-Supan, 2002. "A Blue Print For Germany’s Pension Reform," MEA discussion paper series 02002, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:53:y:2000:i:1:p:41-58. 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: (Ann Crampton). General contact details of provider: http://edirc.repec.org/data/ntaaaea.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.