Intergenerational risk sharing, pensions and endogenous labor supply in general equilibrium

Open Access
Authors
Publication date 01-2008
Series CESifo working paper, 2185
Number of pages 11
Publisher Munich: CESifo
Organisations
  • Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
Abstract In the context of a two-tier pension system, with a pay-as-you-go first tier and a fully funded second tier, we demonstrate that a system with a defined wage-indexed second tier performs strictly better than one with a defined contribution or defined real benefit second tier. The former completely separates systematic redistribution (confined to the first tier) from intergenerational risk sharing (the role of the second tier). This way labor supply is undistorted.

Document type Working paper
Language English
Published at http://www.ifo.de/pls/guestci/download/CESifo%20Working%20Papers%202008/CESifo%20Working%20Papers%20January%202008/cesifo1_wp2185.pdf http://www.cesifo-group.de/pls/guestci/download/CESifo%20Working%20Papers%202008/CESifo%20Working%20Papers%20January%202008/cesifo1_wp2185.pdf
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