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International Welfare Spillovers of National Pension Schemes

Staveley-O’Carroll James () and Staveley-O’Carroll Olena M.
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Staveley-O’Carroll James: Economics Division, Babson College, Westgate Hall, 231 Forest Street, Babson Park, MA02457USA
Staveley-O’Carroll Olena M.: Department of Economics and Accounting, College of the Holy Cross, One College Street, Worcester, MA01610, USA

The B.E. Journal of Macroeconomics, 2021, vol. 21, issue 1, 363-397

Abstract: We employ a two-country overlapping-generations model to explore the international dimension of household portfolio choices induced by the asymmetric provision of government-run pensions. We study the resulting patterns of risk-sharing and the corresponding welfare effects on both home and foreign agents. Introducing the defined benefits pay-as-you-go system at home increases the welfare of all other agents at the expense of the home workers and improves the degree of intergenerational risk sharing abroad. Conversely, a defined contributions system leads to welfare losses of both home cohorts accompanied by gains abroad, but does increase the extent of intergenerational risk sharing at home.

Keywords: welfare; pay-as-you-go system; international portfolio choice; OLG model (search for similar items in EconPapers)
JEL-codes: D52 F21 F41 G11 H55 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/bejm-2019-0207

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