Optimal Actuarial Fairness in Pension Systems
1996 (English)Report (Other academic)
A rationale for a compulsory pension system is that the government wants to correct supposedly myopic behavior by the individuals. Given such a system, we calculate the optimal relation between marginal contributions and benefits, i.e., the optimal degree of marginal actuarial fairness, for the individuals or for the government. We show that the optimal degree of marginal actuarial fairness increases in the rate of return in the social security system and also decreases in the government's rate of time preference. It is also shown that labor supple always increases when the link between marginal contributions and benefits is strengthened.
Place, publisher, year, edition, pages
Stockholm: IIES , 1996. , 17 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 609
IdentifiersURN: urn:nbn:se:su:diva-41940OAI: oai:DiVA.org:su-41940DiVA: diva2:343114