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Unfunded Pensions and Endogenous Labor Supply

  • Bhattacharya, Joydeep
  • Andersen, Torben M

A classic result in dynamic public economics states that there is no welfare rationale for pay-as-you-go (PAYG) pensions in a dynamically-efficient neoclassical economy with exogenous labor supply. Parenthetically, a welfare justification for PAYG pensions exists if the economy is dynamically inefficient. Under a sufficient condition that the old be no less risk-averse than the young, these results extend to an economy with endogenous labor supply.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/p14912-2012-02-10.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 34912.

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Date of creation: 10 Feb 2012
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Publication status: Published in Macroeconomic Dynamics, June 2013, vol. 17 no. 5, pp. 971-997
Handle: RePEc:isu:genres:34912
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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