Pay-as-you-go Pension Systems as Incomplete Social Contracts

Arbeitspapier

We model a pay-as-you-go (PAYG) pension system as a series of incomplete intergenerational contracts. Each generation pays a pension to its parents as the price for a premortal transferral of economic property rights. The terms of this intergenerational trade are fixed in a social contract, which due to its long-term nature is incomplete and likely to be renegotiated after some of the initial uncertainty has been resolved. In between, however, investments and education efforts have to be carried out which affect the value of the economic resources to be transferred between generations. This set-up creates a number of intergenerational externalities (including a canonical hold-up problem) which may contribute to the explanation of those problems that real-world PAYG public pension systems currently face.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Volkswirtschaftliche Diskussionsbeiträge ; No. 62-97

Classification and Topics

• Classification: Wirtschaft ; Social Security and Public Pensions ; Transactional Relationships; Contracts and Reputation; Networks ; Social Choice; Clubs; Committees; Associations
• Subject: Pay-as-you-go Pension Systems ; Incomplete Contracts ; Social Contracts

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Wagener, Andreas
• Event: Veröffentlichung
• (who): Universität Siegen, Fakultät III, Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht
• (where): Siegen
• (when): 1997

Further information

• Handle: http://hdl.handle.net/10419/118755
• Last update: 10.03.2025, 11:43 AM CET