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The Economics of Pensions: A non-conventional approach

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  • Sergio Cesaratto

Abstract

This paper examines two alternative pension systems, pay-as-you-go (PAYGS) and the capitalisation system (CS) in the light of alternative economic theories. It starts from a critical discussion of the insurance-fiction model of PAYGS proposed by Samuelson in 1958. The pros and cons of that model are illustrated by taking into consideration the non-orthodox views of Keynes, Lerner, Pechman, de Finetti and Eisner. Next, the paper investigates the relationship between CS and the marginalist capital theory. It is shown that, interpreted in a neoclassical framework, CS presents endogenous mechanisms of adjustment to demographic shocks. The problems of the transition between PAYGS and CS are then examined. The paper then discusses some main features of the current US policy debates on the Social Security system. Finally, the alleged advantages of a wider adoption of CS are criticised in the light of the Keynesian theory of effective demand reinforced by the Sraffian criticism of neoclassical capital theory.

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  • Sergio Cesaratto, 2002. "The Economics of Pensions: A non-conventional approach," Review of Political Economy, Taylor & Francis Journals, vol. 14(2), pages 149-177.
    • Handle: RePEc:taf:revpoe:v:14:y:2002:i:2:p:149-177
    DOI: 10.1080/09538250220126492
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    Cited by:

    1. Marcella Corsi; Carlo D’Ippoliti, 2016. "Le pensioni tra efficienza economica e giustizia sociale: un connubio possibile (The pensions system between economic efficiency and social justice: A possible mix)," Moneta e Credito, Economia civile, vol. 69(274), pages 227-250.
    2. Sergio Cesaratto, 2004. "The controversy over the US Social Security Surplus. A non conventional view," Department of Economics University of Siena 418, Department of Economics, University of Siena.
    3. Carlos Patrick Alves da Silva & Claudio Alberto Castelo Branco Puty & Marcelino Silva da Silva & Solon Venâncio de Carvalho & Carlos Renato Lisboa Francês, 2017. "Financial forecasts accuracy in Brazil’s social security system," PLOS ONE, Public Library of Science, vol. 12(8), pages 1-20, August.
    4. Codrina Rada, 2012. "The Economics of Pensions. Remarks on Growth, Distribution and Class Conflict," Working Paper Series, Department of Economics, University of Utah 2012_02, University of Utah, Department of Economics.
    5. María del Carmen Valls Martínez & José Manuel Santos-Jaén & Fahim-ul Amin & Pedro Antonio Martín-Cervantes, 2021. "Pensions, Ageing and Social Security Research: Literature Review and Global Trends," Mathematics, MDPI, vol. 9(24), pages 1-25, December.
    6. Bermejo Patón, Fernando & Febrero Paños, Eladio & Uxó González, Jorge, 2015. "La sostenibilidad del sistema español de pensiones: Una aproximación alternativa/Sustainability of the Spanish Pension System: An Alternative View," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 33, pages 783-800, Septiembr.
    7. Álvaro Martín Moreno R. & Fabio Ortiz, 2010. "Economía política de la reforma del sistema colombiano de pensiones," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 12(22), pages 167-192, January-J.

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