Quantifying the risk-sharing welfare gains of social security

Conny Olovsson

Journal of Monetary Economics, 2010, vol. 57, issue 3, 364-375

Abstract: The welfare effects of intergenerational risk sharing through a pay-as-you-go social security system that is efficiently indexed to wages or interest rates are quantified. Comparing steady states, there are large welfare gains of being born into an economy with efficient risk sharing as compared to the current U.S. system. Efficient policy involves an increasingly risky net of tax income over the life cycle. When adjustment to steady state is taken into account, the welfare gains largely turn negative. The results are also compared and contrasted to the first best allocation.

Keywords: Social; security; Intergenerational; risk; sharing (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (34)

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