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Pension reform with migration and mobile capital: is a Pareto improvement possible?

Igor Fedotenkov and Lex Meijdam

International Economics and Economic Policy, 2014, vol. 11, issue 3, 450 pages

Abstract: This paper shows that in a two-country two-overlapping-generations model with migration, capital mobility and an immobile production factor (land), a locally welfare-improving pension reform at the cost of the neighboring country is possible if land plays a minor role in production. Furthermore, differences in the size of the PAYG pension schemes between the countries distort the international allocation of labour and capital. As a result, a Pareto-improving pension reform is possible if countries employ PAYG pension schemes of different size, provided that a federal government exists that redistributes benefits and losses of the reform both intergenerationally and internationally. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Pension reform; Land; Migration; Welfare improvement; F22; F41; H55 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10368-013-0259-2

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