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Pay-as-you-go social security in a changing environment
Journal of Population Economics
|January 1, 1991
Summary
This study explores optimal social security systems for developed countries, finding that intergenerational resource sharing can boost welfare despite tax inefficiencies. The research considers changing economic conditions and global economic integration.
Area of Science:
- Economics
- Public Finance
- Demography
Background:
- Social security systems face challenges from fluctuating population growth and productivity.
- Intergenerational resource sharing is a key mechanism in pay-as-you-go systems.
- Economic openness and tax policies impact social welfare redistribution.
Purpose of the Study:
- To determine the optimal design of a pay-as-you-go social security scheme.
- To analyze how environmental changes affect intergenerational resource allocation.
- To evaluate the role of economic openness in social welfare optimization.
Main Methods:
- Utilizing an overlapping generations model.
- Employing a social welfare function (weighted or unweighted generational utilities).
- Analyzing the impact of payroll tax deadweight losses and economic openness.
Main Results:
- Intergenerational resource sharing can enhance social welfare.
- Payroll tax deadweight losses limit the effectiveness of redistribution.
- Economic openness influences the extent of intergenerational resource sharing.
Conclusions:
- Optimal social security design requires balancing intergenerational equity with efficiency.
- Policy interventions should account for demographic and productivity fluctuations.
- Further research can explore specific policy implications for developed economies.
Keywords:
Demographic FactorsDeveloped CountriesEconomic ConditionsEconomic DevelopmentEconomic FactorsEconomic ModelFamily And HouseholdFamily CharacteristicsFinancial ActivitiesFinancing, GovernmentGenerationsIntergenerational TransfersMacroeconomic FactorsMethodological StudiesMicroeconomic FactorsModels, TheoreticalPopulationPopulation DynamicsPopulation GrowthPopulation SizeProductivityResearch MethodologyResource AllocationSocial SecuritySocial WelfareTaxationTheoretical Studies
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