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Unfunded Pensions and Endogenous Labor Supply

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  • Bhattacharya, Joydeep
  • Andersen, Torben M

Abstract

A classic result in dynamic public economics states that there is no welfare rationale for pay-as-you-go (PAYG) pensions in a dynamically-efficient neoclassical economy with exogenous labor supply. Parenthetically, a welfare justification for PAYG pensions exists if the economy is dynamically inefficient. Under a sufficient condition that the old be no less risk-averse than the young, these results extend to an economy with endogenous labor supply.

Suggested Citation

  • Bhattacharya, Joydeep & Andersen, Torben M, 2012. "Unfunded Pensions and Endogenous Labor Supply," Staff General Research Papers Archive 34912, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:34912
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    References listed on IDEAS

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    Cited by:

    1. Torben Andersen & Joydeep Bhattacharya, 2011. "On myopia as rationale for social security," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(1), pages 135-158, May.
    2. Shi, Lisi & Suen, Richard M. H., 2014. "The Macroeconomic Consequences of Asset Bubbles and Crashes," MPRA Paper 57045, University Library of Munich, Germany.
    3. Andrei Matveenko & Vladimir Matveenko, 2014. "Curvature and the Elasticity of Substitution: What Is the Link? Project," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 10(2), pages 7-20.
    4. Amol Amol & Monisankar Bishnu & Tridip Ray, 2023. "Pension, possible phaseout, and endogenous fertility in general equilibrium," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(2), pages 376-406, April.

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    More about this item

    Keywords

    social security; dynamic efficiency; pay-as-you-go; Diamond model; endogenous labor supply;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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