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Intergenerational Risk Sharing, Pensions, and Endogenous Labour Supply in General Equilibrium *
Author(s) -
Beetsma Roel M. W. J.,
Romp Ward E.,
Vos Siert J.
Publication year - 2013
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2012.01732.x
Subject(s) - economics , labour supply , labour economics , pension , overlapping generations model , wage , general equilibrium theory , pension system , microeconomics , finance
We show that a two‐tier pension system, with a pay‐as‐you‐go first tier and a fully funded, defined wage‐indexed second tier, can provide for optimal intergenerational risk‐sharing without distorting the labour supply, thereby achieving the first best. Other arrangements with a fully‐funded second tier fail to achieve the first best.
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