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Pareto-Improving Social Security Reform


  • Pascal Belan

    (CREST, INSEE, Paris, France)

  • Philippe Michel

    (GREQAM, University of the Mediterranian, IUF and CORE)

  • Pierre Pestieau

    () (CREPP, Université de Liège and CORE, Université de Louvain; 7, Boulevard du Rectorat, Liège 4000, Belgium.)


It is generally accepted that moving from an unfunded to a funded social security system implies a welfare loss for the transition generation—that is, the generation that has to pay twice: first, saving for its own retirement and, second, contributing to the pensions of the then retired generation. This article shows that in a setting of endogenous growth with positive externality such a transition can be Pareto improving. But it argues also that social security reform is more a pretext than a requirement for internalizing such a positive externality. The Geneva Papers on Risk and Insurance Theory (1998) 23, 119–125. doi:10.1023/A:1008622110502

Suggested Citation

  • Pascal Belan & Philippe Michel & Pierre Pestieau, 1998. "Pareto-Improving Social Security Reform," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 23(2), pages 119-125, December.
  • Handle: RePEc:pal:genrir:v:23:y:1998:i:2:p:119-125

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