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A Model for Determining Consumption and Social Assistance Demand in Uncertainty Conditions

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  • Paolo Melindi Ghidi

    () (Università degli Studi di Bologna)

Abstract

This article focuses on the relation between demographic impact and social insurance and consists of two distinct yet closely related sections. The first section introduces a three overlapping generation model which tries to determine the ageing effects on the individual consumption and saving decisions in a partial equilibrium approach. The second section, instead, aims at providing a theory on the need to set up an ad hoc non self-sufficiency fund. It is shown that this mandatory and universal social insurance can guarantee a relatively higher ex-post individual welfare level when the individual fails to get insured and makes his decisions in uncertainty conditions, that is, reacting to risks in an imperfect way through the setting up of a precautionary saving fund.

Suggested Citation

  • Paolo Melindi Ghidi, 2005. "A Model for Determining Consumption and Social Assistance Demand in Uncertainty Conditions," Rivista di Politica Economica, SIPI Spa, vol. 95(6), pages 167-198, November-.
  • Handle: RePEc:rpo:ripoec:v:95:y:2005:i:6:p:167-198
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    References listed on IDEAS

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    1. Attanasio, Orazio P, et al, 1999. "Humps and Bumps in Lifetime Consumption," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 22-35, January.
    2. Davies, James B, 1981. "Uncertain Lifetime, Consumption, and Dissaving in Retirement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 561-577, June.
    3. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January.
    4. Daniela Monacelli, 1998. "Per una riforma dello stato sociale: le politiche di assistenza," Politica economica, Società editrice il Mulino, issue 1, pages 97-154.
    5. Levhari, David & Mirman, Leonard J, 1977. "Savings and Consumption with an Uncertain Horizon," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 265-281, April.
    6. Cagetti, Marco, 2003. "Wealth Accumulation over the Life Cycle and Precautionary Savings," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(3), pages 339-353, July.
    7. Leibenstein, Harvey, 1974. "An Interpretation of the Economic Theory of Fertility: Promising Path or Blind Alley?," Journal of Economic Literature, American Economic Association, vol. 12(2), pages 457-479, June.
    8. Kennickell, Arthur & Lusardi, Annamaria, 2005. "Disentangling the importance of the precautionary saving motive," CFS Working Paper Series 2006/15, Center for Financial Studies (CFS).
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    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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