The Impact of Reducing the Pension Generosity on Inequality and Schooling

Miguel Sánchez-Romero and Alexia Fürnkranz-Prskawetz

De Economist, 2020, vol. 168, issue 2, No 6, 279-304

Abstract: Abstract We investigate the impact of a reduction in the pension replacement rate on the schooling choice and on inequality in an overlapping generations model in which individuals differ by their life expectancy and in their cost of attending schooling. Within our framework we illustrate that many pension systems are ex ante regressive due to the difference in life expectancy across skill groups. We then derive the level of progressivity that needs to be implemented to restore an equal treatment of the pension system across skill groups.

Keywords: Human capital; Longevity; Inequality; Life cycle; Social security; Pension; Progressivity (search for similar items in EconPapers)
JEL-codes: C60 D31 H55 J10 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Working Paper: The impact of reducing the pension generosity on inequality and schooling (2019)
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DOI: 10.1007/s10645-020-09359-w

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