What Are the Gains from Pension Reform?

Assar Lindbeck and Mats Persson

No 535, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper presents a unified analytical framework for the analysis of social security reform. It discusses reform along two dimensions: Pay-As-You-Go versus fully funded on the one hand, and actuarial versus non-actuarial on the other. Making the system more actuarial entails a trade-off between less distorted work incentives and intra-generational redistribution. Increasing the degree of funding entails a trade-off between more distorted work incentives, and redistribution in favor of future generations. If a PAYGO system already has strong actuarial elements, the additional welfare gain from making it fully funded derives from the possibility of portfolio diversification.

Keywords: Pension reform; social security; funded pensions; work incentives; saving (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2000-07-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0535

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