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Public Policy Evaluation, Social Risk and Pension Capital

Author

Listed:
  • Mordecai KURZ

    (Department of Economics Stanford University)

Abstract

Today’s demand for social insurance is supported by economic reasoning showing that private insurance markets do not provide efficient coverage for medical insurance, for inter-generational risk sharing and for income instability. It is unfashionable to say but government intervention in these areas is the solution and Conservative economic ideology is the problem. Hence, policy in the 21th century will focus on publically managed social insurance. In studying the problem of Social Security, I show it arises from changing demography which generated a deficit. Study of proposed solutions lead me to four conclusiones: (i) Privatization of Social Security is infeasible since system has a «Legacy Debt» of $11.6 trillion. (ii) Proposals to privatize Social Security are ideologically motivated and offer no real solution. (iii) Privatization is undesirable since it is not optimal to rely entirely on the markets to determine retirees’ incomes. Volatility of financial markets will result in unacceptable inter-generational income inequality.

Suggested Citation

  • Mordecai KURZ, 2006. "Public Policy Evaluation, Social Risk and Pension Capital," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 114(3), pages 389-416.
  • Handle: RePEc:vep:journl:y:2006:v:114:i:3:p:389-416
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    References listed on IDEAS

    as
    1. Djajic, Slobodan, 1987. "Illegal aliens, unemployment and immigration policy," Journal of Development Economics, Elsevier, pages 235-249.
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    10. repec:fth:michin:449 is not listed on IDEAS
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    More about this item

    Keywords

    Welfare state; Social Security; public policy; social insurance; insurance markets; risk sharing; Legacy Debt; privatization; private retirement accounts; conservative economics; market volatily;

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D6 - Microeconomics - - Welfare Economics
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • G2 - Financial Economics - - Financial Institutions and Services

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