 Dilemmas about PensionsEconomic Analysis and Policy, 2002, vol. 32, issue 1, 91-105 Abstract: This paper looks at the general principles underlying pensions systems, and the relative merits of different kinds of system of state superannuation payments. A pay as you go system is, it is argued, usually inferior to a fully funded one. The paper presses the case for the view that redistribution is a cogent argument--perhaps the most cogent argument--for state provision, in a practical context where earnings opportunities differ between individuals. Perfect capital markets are assumed, and labour supplies are endogenous. There is some merit in a uniform state pension supported by a proportional tax on wage earnings, and its implications under two different social welfare functions are considered. But outcomes are Pareto-dominated, under each social welfare function, by a self-selection system from a continuous menu of contribution and pension rates. The least able opt for a large pension and a high tax rate, the abler for less of both. So far from state pensions being proportional to earnings, they should in fact be negatively associated with them. Keywords: Pay as You Go; Pension (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:32:y:2002:i:1:p:91-105 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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