On the optimality of public pensions in an economy with life-cyclers and myopes
(2002) Journal of Economic Behavior & Organization — Vol. 47, n° 1, p. 121-140 (2002)
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- Authors
- Abstract
- In this paper, we develop a two-period overlapping generations model with two types of individuals, life-cyclers and myopes. We revisit Feldstein’s problem by deriving the optimal level of social security using a social welfare function à la Samuelson (rather than à la Lerner). In opposition to the Lerner solution, our optimal pension benefit exhibits several interesting properties (dynamic efficiency, egalitarism, easy implementation). Then the opportunity to move to a partially funded system is examined. It turns out that a partially funded system ensures the equality of utility within and across generations. The effective use of funding opportunities is less a question of rate of return than a question of equal treatment of individuals.
- Affiliations
University of Lille 2 CADRE and Ministère de la Région Wallone - SES
Citations
Docquier, F. (2002). On the optimality of public pensions in an economy with life-cyclers and myopes. Journal of Economic Behavior & Organization, 47(1), 121-140. https://doi.org/10.1016/S0167-2681(01)00174-3 (Original work published 2002)