Social Security Reform and Intergenerational Trade: Is there Scope for a Pareto-Improvement?

Arbeitspapier

In earlier literature, the suggested Pareto improvements in pay-as-you-go (PAYG) systems have relied on the presence of externalities or the possibility of intragenerational redistribution. We show that neither assumption is necessary in an economy with intergenerational trade in a fixed factor of production, here labeled as land. Reducing the social security tax rate encourages investment in complementary human capital. Future efficiency gains accruing to land are capitalized in its value which compensates the land-owning pensioners for reduced benefits. We also explain why the PAYG system may have lost its appeal even for pensioners after its introduction.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 795

Classification and Topics

• Classification: Wirtschaft
• Subject: social security reform ; fixed factor ; pay-as-you-go system ; capital gains taxation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koethenbuerger, Marko ; Poutvaara, Panu
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/75984
• Last update: 10.03.2025, 11:42 AM CET