Variable Retirement and the Effects of Social Insurance on Savings, Wealth, and Welfare

Stephen J Turnovsky and Neil Bruce

No 2007-5, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: We construct a Blanchard-style overlapping generations model consisting of long-lived individuals who have uninsurable idiosyncratic risk resulting from uncertain retirement periods and medical costs in retirement. Without social insurance, such individuals must save for these eventualities. We examine the impact of pay-as-you-go social insurance policies (public pensions and medicare coverage) on individual and aggregate consumption, saving, and wealth levels as well as wealth distribution. We also derive expressions for optimal (Pareto improving) social insurance policies.

JEL-codes: D91 E10 J20 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-age, nep-dge, nep-ias and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:5519

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