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.

Svend Hougaard E. Jensen No current data available.

Morten I. Lau No current data available.

Panu Poutvaara No current data available.