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The possibility of Pareto-Improving Pension Reform: More Arguments

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  • Damjanovic, Tatiana

    (University of Essex)

Abstract

This article provides simulation results of Pareto-improving transitions from pay-as-you-go to fully funded pension systems in an economy where agents are heterogeneous within generations. The possibility of such transitions for a wide range of parameters states that intergenerational heterogeneity should no longer be considered an obstacle when implementing Pareto-improving pension reforms. To maintain redistributive or insurance mechanisms supported by pay-as-you-go systems, I propose to replace social system with redistributive tax and transfer payments inside one generation. This would save dynamically efficient economy from the inefficiency related to the implicit taxes on pension contributions imposed by pay-as-you-go systems.

Suggested Citation

  • Damjanovic, Tatiana, 2003. "The possibility of Pareto-Improving Pension Reform: More Arguments," Royal Economic Society Annual Conference 2003 53, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:53
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    References listed on IDEAS

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    More about this item

    Keywords

    pension reform; Pareto-improving transition; heterogeneous population; redistribution and insurance;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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