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Pareto‐improving pension reform through technological implementation
Author(s) -
Roberts Mark A.
Publication year - 2013
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12013
Subject(s) - economics , pareto principle , pension , productivity , profit (economics) , overlapping generations model , total factor productivity , factor shares , microeconomics , technological change , macroeconomics , operations management , production (economics) , finance
Abstract We present a standard OLG model where a pension reform promotes the adoption of a new technology by lowering the interest rates that discount the future profit gains. This then leads to a rise in total factor productivity, which, for some parameter values, renders the reform Pareto‐improving. The analysis adds to the existing literature, concluding that a supply‐side response is necessary for any such improvement, and presents a rise in total factor productivity as another possible mechanism.