Economics

Svend Hougaard E. Jensen, Morten I. Lau, Panu Poutvaara

Efficiency and Equity Aspects of Alternative Social Security Rules

Section: Articles
FinanzArchiv (FA)

Volume 60 () / Issue 3, pp. 325-358 (34)

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This paper studies human-capital formation, labor-supply, and retirement decisions associated with four alternative regimes of social security. We implement a theoretical model with overlapping generations of households and two different ability types within each generation. We find that with a given social security contribution rate, it is better to transfer income to the elderly as old-age benefits, paid independently of labor-market status. This holds with both Bismarckian and Beveridgean benefits. With sufficiently small ability differences, a Bismarckian system of old-age benefits is likely to offer the highest level of utility to all citizens.
Authors/Editors

Svend Hougaard E. Jensen No current data available.

Morten I. Lau No current data available.

Panu Poutvaara No current data available.