Unfunded Pensions and Endogenous Labor Supply
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.
|Date of creation:||10 Feb 2012|
|Date of revision:|
|Publication status:||Published in Macroeconomic Dynamics, June 2013, vol. 17 no. 5, pp. 971-997|
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