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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Pareto-Improving Social Security Reform When Financial Markets Are Incomplete!? |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | American Economic Review |
| Publisher | American Economic Association |
| Geographical Reach | international |
| ISSN | 0002-8282 |
| Volume | 96 |
| Number | 3 |
| Page Range | 737 - 755 |
| Date | 2006 |
| Abstract Text | This paper studies an overlapping generations model with stochastic production and incomplete markets to assess whether the introduction of an unfunded social security system leads to a Pareto improvement. When returns to capital and wages are imperfectly correlated a system that endows retired households with claims to labor income enhances the sharing of aggregate risk between generations. Our quantitative analysis shows that, abstracting from the capital crowding-out effect, the introduction of social security represents a Pareto improving reform, even when the economy is dynamically effcient. However, the severity of the crowding-out effect in general equilibrium tends to overturn these gains. |
| Free access at | Official URL |
| Official URL | http://www.jstor.org/stable/30034069 |
| Digital Object Identifier | 10.1257/aer.96.3.737 |
| Other Identification Number | merlin-id:3509 |
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