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UNFUNDED PENSIONS AND ENDOGENOUS LABOR SUPPLY

Published online by Cambridge University Press:  06 March 2012

Torben M. Andersen  and
Joydeep Bhattacharya
Torben M. Andersen
Affiliation:
University of Aarhus
Joydeep Bhattacharya*
Affiliation:
Iowa State University
*
Address correspondence to: Joydeep Bhattacharya, Department of Economics, Iowa State University, Ames, IA 50011-1070, USA; e-mail: joydeep@iastate.edu.
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Abstract

A classic result in dynamic public economics states that there is no welfare rationale for pay-as-you-go (PAYG) pensions in a dynamically efficient overlapping-generations economy with exogenous labor supply. Parenthetically, a welfare justification for PAYG pensions exists if the economy is dynamically inefficient. Under the sufficient condition that the old be no less risk-averse than the young, both these results extend to an economy with endogenous labor supply.

Keywords

PensionsSocial SecurityDynamic EfficiencyEndogenous Labor Supply
Type
Articles
Information
Macroeconomic Dynamics , Volume 17 , Issue 5 , July 2013 , pp. 971 - 997
Copyright
Copyright © Cambridge University Press 2012 

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