Optimal Sharing of Labor Productivity Risks and Mix of Pay-As-You-Go and Savings

Arbeitspapier

The paper addresses two related issues: the optimal intergenerational sharing of laborproductivity risks, through a Pay-As-You-Go (PAYG) social security, and the mix ofPAYG and savings for retirement provision in a small open economy. It shows that partial contingency of the social security on the stochastic labor productivity is ex ante optimal,when the interest rate is above the expected growth rate of the economy and when thegovernment has a lifetime perspective of the risk exposure. The paper also provides acondition for partial displacement of savings by the PAYG, which is in line with vastempirical evidence.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 08-066/1

Classification and Topics

• Classification: Wirtschaft ; Social Security and Public Pensions ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Subject: intergenerational risk sharing ; PAYG social security ; household's savings ; Arbeitsproduktivität ; Generationengerechtigkeit ; Umlageverfahren ; Sparen ; Privater Haushalt ; Kleine offene Volkswirtschaft ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bilard, Debora Kusmerski
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/87037
• Last update: 10.03.2025, 11:44 AM CET