Labor income risk, demographic risk, and the design of (wage-indexed) social security

Christoph Borgmann

No 100, Discussion Papers from Albert-Ludwigs-Universität Freiburg, Institut für Finanzwissenschaft

Abstract: Pay-as-you-go pension programs can help to share risk amongst generations. While a wage-indexed pension program is best suited to share labor income risk, I show that the combination of stochastic labor income and stochastic population growth may reduce the possibilities for intergenerational risk sharing: Labor income risk can only be shared when individuals are also exposed to demographic risk. For demographic uncertainty the usual categorization of pension programs does not suffice. I therefore introduce policies on how the demographic uncertainty is transmitted via social security. An optimal demographic indexation is derived for a small open economy and a closed economy.

Keywords: intergenerational risk sharing; social security; demography (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/56409/1/689289170.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:alufin:100

Access Statistics for this paper

More papers in Discussion Papers from Albert-Ludwigs-Universität Freiburg, Institut für Finanzwissenschaft Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().