Intergenerational Risk Sharing, Pensions and Endogenous Labor Supply in General Equilibrium

17 Pages Posted: 21 Jan 2008

See all articles by Roel M. W. J. Beetsma

Roel M. W. J. Beetsma

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); European Commission; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Tinbergen Institute; Netspar

Ward E. Romp

University of Amsterdam - Faculty of Economics and Business

Siert J. Vos

University of Amsterdam

Date Written: January 2008

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.

Keywords: funded pensions, risk sharing, overlapping generations, endogenous labour supply

JEL Classification: E21

Suggested Citation

Beetsma, Roel M. W. J. and Romp, Ward E. and Vos, Siert J., Intergenerational Risk Sharing, Pensions and Endogenous Labor Supply in General Equilibrium (January 2008). CESifo Working Paper No. 2185, Available at SSRN: https://ssrn.com/abstract=1085973 or http://dx.doi.org/10.2139/ssrn.1085973

Roel M. W. J. Beetsma (Contact Author)

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM) ( email )

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Ward E. Romp

University of Amsterdam - Faculty of Economics and Business ( email )

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Amsterdam
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Siert J. Vos

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

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