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PAYG pensions and endogenous retirement revisited

Author

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  • Joachim Thøgersen

    (University of South-Eastern Norway, USN School of business)

Abstract

This paper presents an OLG model with endogenous retirement and endogenous growth. The purpose is to show analytically the effects of a PAYG pension system on the economy in such a setting. Firstly, it is shown that a PAYG system is neutral in capital intensity. Secondly, we analytically characterize the conditions that determine the effect of a PAYG system on welfare, and show that a PAYG system can be welfare improving. Thirdly, the analysis and the results apply to a non-steady-state equilibrium path. growth. The purpose is to show analytically the effects of a PAYG pension system on the economy in such a setting. Firstly, it is shown that a PAYG system is neutral in capital intensity. Secondly, we analytically characterize the conditions that determine the effect of a PAYG system on welfare, and show that a PAYG system can be welfare improving. Thirdly, the analysis and the results apply to a non-steady-state equilibrium path.

Suggested Citation

  • Joachim Thøgersen, 2022. "PAYG pensions and endogenous retirement revisited," Economics Bulletin, AccessEcon, vol. 42(4), pages 1826-1835.
    • Handle: RePEc:ebl:ecbull:eb-22-00332
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    File URL: http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I4-P152.pdf
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    More about this item

    Keywords

    Endogenous retirement; Public pensions; Overlapping Generations; Endogenous Growth;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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