Alternative Risk-Sharing Mechanisms of Social Security - 10.1628/001522110X524188 - Mohr Siebeck

Øystein Thøgersen, Kine Bøhlerengen

Alternative Risk-Sharing Mechanisms of Social Security

Section: Articles
FinanzArchiv (FA)

Volume 66 () / Issue 2, pp. 134-152 (19)

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Adopting a portfolio choice approach to pension design, we derive illuminating closed form solutions for optimal pay-as-you-go social security programs. We demonstrate that the nature of the implied risk-sharing effects and their magnitudes are sensitive to the stochastic specification of aggregate wage income growth (i.e. the implicit return on the pay-as-you-go program). Considering individuals in any generation from a »Rawlsian«, prebirth perspective, fairly large pay-as-you-go programs in terms of the magnitude of the optimal contribution rate can be rationalized if wage shocks are not permanent.

Øystein Thøgersen No current data available.

Kine Bøhlerengen No current data available.