Funding Social Security: The Transition in a Life-Cycle Growth Model

Kenneth Lewis and Laurence Seidman

Eastern Economic Journal, 2002, vol. 28, issue 2, 159-180

Abstract: A life-cycle growth model is used to investigate the quantitative impact of gradually converting the financing of social security from pay-as-you-go (PAYGO) to full funding. The magnitudes of the losses and gains that particular age cohorts will experience under alternative speeds of conversion are estimated using empirically-reasonable parameter values based on the econometric literature. Transition path simulations of a gradual three-generation (90-year) conversion show small losses to current workers, but large gains to children and grandchildren of young workers, and even larger gains to future descendants.

Keywords: Life Cycle; Pay as You Go; Social Security (search for similar items in EconPapers)
JEL-codes: D91 H55 J14 J26 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:28:y:2002:i:2:p:159-180

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