Social security and risk sharing

Piero Gottardi and Felix Kubler

Journal of Economic Theory, 2011, vol. 146, issue 3, 1078-1106

Abstract: In this paper we identify conditions under which the introduction of a pay-as-you-go social security system is ex ante Pareto-improving in a stochastic OLG economy with capital accumulation and land. We argue that these conditions are consistent with realistic specifications of the parameters of the economy. In our model financial markets are complete and competitive equilibria interim Pareto efficient. Therefore, a welfare improvement can only be obtained if agents[modifier letter apostrophe] welfare is evaluated ex ante, and arises from an improvement in intergenerational risk sharing. We also examine the optimal size of a given social security system as well as its optimal reform.

Keywords: Intergenerational; risk; sharing; Social; security; Ex; ante; welfare; improvements; Social; security; reform; Price; effects (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (24)

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Related works:
Working Paper: Social Security and Risk Sharing (2009)
Working Paper: Social Security and RIsk Sharing (2007)
Working Paper: Social Security and Risk Sharing (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:146:y:2011:i:3:p:1078-1106

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