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Funding social security through Pareto-optimal conversion policies

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  • Bernd Raffelhüschen

Abstract

This paper examines Pareto-superior funding strategies for a pay-as-you-go financed social security system, using a dynamic simulation approach. A life-cycle model is employed to derive realistic estimates concerning the pure efficiency gains of that policy. As a result, the representative individuals are free to allocate goods as well as leisure time over their life span. The differentiation between efficiency gains and intergenerational redistribution is made possible by a tax-transfer authority which compensates all generations otherwise burdened with debt financed transfer programs. Institutional requirements and the parameter estimates underlying the policy simulations reflect the German social security system, although conclusions about other countries and circumstances could easily be drawn. Copyright Springer-Verlag 1993

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  • Bernd Raffelhüschen, 1993. "Funding social security through Pareto-optimal conversion policies," Journal of Economics, Springer, vol. 58(1), pages 105-131, December.
    • Handle: RePEc:kap:jeczfn:v:58:y:1993:i:1:p:105-131
    DOI: 10.1007/BF03052294
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    1. Laisney, François & Pohlmeier, Winfried & Staat, Matthias, 1991. "Estimation of labour supply functions using panel data: a survey," ZEW Discussion Papers 91-05, ZEW - Leibniz Centre for European Economic Research.
    2. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 146, pages 640-647.
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    4. Breyer, Friedrich & Straub, Martin, 1993. "Welfare effects of unfunded pension systems when labor supply is endogenous," Journal of Public Economics, Elsevier, vol. 50(1), pages 77-91, January.
    5. Homburg, Stefan & Richter, Wolfram, 1990. "Eine effizienzorientierte Reform der GRV," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 183-191.
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    Cited by:

    1. Hans Fehr & Sabine Jokisch & Laurence J Kotlikoff, 2006. "Will China Eat Our Lunch or Take Us to Dinner? Simulating the Transition Paths of the US, EU, Japan and China," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Anna Park & Daniel Rees (ed.),Demography and Financial Markets, Reserve Bank of Australia.
    2. Damjanovic, Tatiana, 2003. "The possibility of Pareto-Improving Pension Reform: More Arguments," Royal Economic Society Annual Conference 2003 53, Royal Economic Society.
    3. Jokisch, Sabine & Kotlikoff, Laurence J., 2007. "Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(2), pages 225-252, June.
    4. Tatiana Damjanovic, 2006. "On The Possibility Of Pareto‐Improving Pension Reform," Manchester School, University of Manchester, vol. 74(6), pages 711-724, December.
    5. Kotlikoff, Laurence J., 2002. "Generational policy," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 27, pages 1873-1932, Elsevier.
    6. Fehr, Hans, 1998. "Privatization of public pensions in Germany: Who gains and how much?," Tübinger Diskussionsbeiträge 148, University of Tübingen, School of Business and Economics.
    7. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 2001. "Finding a Way Out of America's Demographic Dilemma," NBER Working Papers 8258, National Bureau of Economic Research, Inc.
    8. Pierre Koning & C.J. Heinrich, 2009. "Cream-skimming, parking and other intended and unintended effects of performance-based contracting in social welfare services," CPB Discussion Paper 134.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Laurence J. Kotlikoff, 1998. "Privatizing U.S. Social Security: some possible effects on intergenerational equity and the economy," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 31-37.
    10. Georg Hirte, 2003. "The Political Feasibility of Privatizing Old‐Age Insurance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 507-525, September.
    11. Zandberg, Eelco & Spierdijk, Laura, 2013. "Funding of pensions and economic growth: are they really related?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(2), pages 151-167, April.

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