Pareto-improving social security reform when financial markets are incomplete!?

• 成果类型: Article
• 署名作者: Krueger, Dirk; Kubler, Felix
• 署名单位: Goethe University Frankfurt; National Bureau of Economic Research; University of Mannheim
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.96.3.737
• 发表日期: 2006
• 页码: 737-755
• 关键词: consumption growth; asset returns

摘要

This paper studies an overlapping generations model with stochastic production and incomplete markets to assess whether the introduction of an unfunded social security system leads to a Pareto improvement. When returns to capital and wages are imperfectly correlated, a system that endows retired households with claims to labor income enhances the sharing of aggregate risk between generations. Our quantitative analysis shows that, abstracting from the capital crowding-out effect, the introduction of social security represents a Pareto-improving reform, even when the economy is dynamically efficient. However, the severity of the crowding-out effect in general equilibrium tends to overturn these gains.