IDEAS home Printed from https://ideas.repec.org/a/cup/jpenef/v16y2017i04p467-484_00.html
   My bibliography  Save this article

Defined benefit pension schemes: a welfare analysis of risk sharing and labour market distortions

Author

Listed:
  • DRAPER, NICK
  • WESTERHOUT, ED
  • NIBBELINK, ANDRÉ

Abstract

Traditionally, collective defined benefit pension schemes have played an important role in the provision of pensions. Various trends such as population ageing put these schemes under serious pressure, however. Whether this is good or bad depends among other things on two factors: one is the value of the risk sharing between generations that is organized by pension schemes, and another is the cost of the distortions of labour supply decisions that these collective schemes imply. This paper constructs a model with overlapping generations of households and a pension scheme to assess the role of these two factors. The paper finds that the welfare gain from intergenerational risk sharing generally dominates the cost of labour supply distortions.

Suggested Citation

  • Draper, Nick & Westerhout, Ed & Nibbelink, André, 2017. "Defined benefit pension schemes: a welfare analysis of risk sharing and labour market distortions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(4), pages 467-484, October.
    • Handle: RePEc:cup:jpenef:v:16:y:2017:i:04:p:467-484_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1474747215000074/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. van Ewijk, Casper & de Groot, Henri L.F. & Santing, A.J. (Coos), 2012. "A meta-analysis of the equity premium," Journal of Empirical Finance, Elsevier, vol. 19(5), pages 819-830.
    2. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 352-352.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nick Draper & André Nibbelink & Johannes Uhde, 2013. "An Assessment of Alternatives for the Dutch First Pension Pillar, The Design of Pension Schemes," CPB Discussion Paper 259.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Chen, Damiaan H. J. & Beetsma, Roel M. W. J. & Ponds, Eduard H. M. & Romp, Ward E., 2016. "Intergenerational risk-sharing through funded pensions and public debt," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(2), pages 127-159, April.
    3. Kastelein, Pim B. & Romp, Ward E., 2020. "Pension Fund Restoration Policy In General Equilibrium," Macroeconomic Dynamics, Cambridge University Press, vol. 24(7), pages 1785-1814, October.
    4. Mădălina-Gabriela ANGHEL & Dragoș Alexandru HAȘEGAN, 2020. "The voluntary pension funds – a viable solution to supplement the pensioners' incomes," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(623), S), pages 51-64, Summer.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dedry, Antoine & Onder, Harun & Pestieau, Pierre, 2017. "Aging, social security design, and capital accumulation," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 145-155.
    2. Stefanie Stantcheva, 2020. "Dynamic Taxation," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 801-831, August.
    3. Peter Kuhn, 1982. "Malfeasance in Long Term Employment Contracts: A New General Model with an Application to Unionism," NBER Working Papers 1045, National Bureau of Economic Research, Inc.
    4. Hans A. Holter & Dirk Krueger & Serhiy Stepanchuk, 2019. "How do tax progressivity and household heterogeneity affect Laffer curves?," Quantitative Economics, Econometric Society, vol. 10(4), pages 1317-1356, November.
    5. repec:dau:papers:123456789/4924 is not listed on IDEAS
    6. Lea Cassar & Mira Fischer & Vanessa Valero, 2022. "Keep Calm and Carry On: Immediate-vs. Six-Month Effects of Mindfulness Training on Academic Performance," CESifo Working Paper Series 10099, CESifo.
    7. Uwe Sunde & Thomas Dohmen & Benjamin Enke & Armin Falkbriq & David Huffman & Gerrit Meyerheim, 2022. "Patience and Comparative Development," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(5), pages 2806-2840.
    8. Ziderman, Adrian, 1989. "Payroll taxes for financing training in developing countries," Policy Research Working Paper Series 141, The World Bank.
    9. Fatih Guvenen & Burhanettin Kuruscu, 2010. "A Quantitative Analysis of the Evolution of the US Wage Distribution, 1970–2000," NBER Chapters, in: NBER Macroeconomics Annual 2009, Volume 24, pages 227-276, National Bureau of Economic Research, Inc.
    10. Lucas, Robert E, Jr, 1996. "Nobel Lecture: Monetary Neutrality," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 661-682, August.
    11. Felicia Ionescu, 2011. "Risky Human Capital and Alternative Bankruptcy Regimes for Student Loans," Journal of Human Capital, University of Chicago Press, vol. 5(2), pages 153-206.
    12. Jordan, Jeffrey L. & Anil, Bulent & Munasib, Abdul, 2010. "Community Development and Local Social Capital," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 42(1), pages 143-159, February.
    13. Edward Lazear, 1977. "Schooling as a Wage Depressant," Journal of Human Resources, University of Wisconsin Press, vol. 12(2), pages 164-176.
    14. Kong, Y.-C. & Ravikumar, B. & Vandenbroucke, G., 2018. "Explaining cross-cohort differences in life-cycle earnings," European Economic Review, Elsevier, vol. 107(C), pages 157-184.
    15. Sunde, Uwe, 2001. "Human Capital Accumulation, Education and Earnings Inequality," IZA Discussion Papers 310, Institute of Labor Economics (IZA).
    16. Tony Smith & M. Fatih Guvenen, 2007. "Inferring Labor Income Risk from Economic Choices: An Indirect Inference Approach," 2007 Meeting Papers 1024, Society for Economic Dynamics.
    17. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 41-74, March.
    18. Moshe Buchinsky & Phillip Leslie, 2010. "Educational Attainment and the Changing U.S. Wage Structure: Dynamic Implications on Young Individuals' Choices," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 541-594, July.
    19. Daehaeng Kim & Chul-In Lee, 2007. "On-the-Job Human Capital Accumulation in a Real Business Cycle Model: Implications for Intertemporal Substitution Elasticity and Labor Hoarding," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 494-518, July.
    20. Peter Lorentzen & John McMillan & Romain Wacziarg, 2008. "Death and development," Journal of Economic Growth, Springer, vol. 13(2), pages 81-124, June.
    21. Sun, Ang & Zhao, Yaohui, 2016. "Divorce, abortion, and the child sex ratio: The impact of divorce reform in China," Journal of Development Economics, Elsevier, vol. 120(C), pages 53-69.

    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jpenef:v:16:y:2017:i:04:p:467-484_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/pef .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.