Efficiency and Equity Aspects of Alternative Social Security Rules

Svend E. Hougaard Jensen, Morten I. Lau and Panu Poutvaara

FinanzArchiv: Public Finance Analysis, 2004, vol. 60, issue 3, 325-358

Abstract: This paper studies human-capital formation, labor-supply, and retirement decisions associated with four alternative regimes of social security. We implement a theoretical model with overlapping generations of households and two different ability types within each generation. We find that with a given social security contribution rate, it is better to transfer income to the elderly as old-age benefits, paid independently of labor-market status. This holds with both Bismarckian and Beveridgean benefits. With sufficiently small ability differences, a Bismarckian system of old-age benefits is likely to offer the highest level of utility to all citizens.

Keywords: social security; education; retirement; labor supply; general-equilibrium models (search for similar items in EconPapers)
JEL-codes: C68 H55 I21 J22 J26 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (20)

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