A Rights-Egalitarian Pay-as-You-Go Pension System

This paper addresses the problem of intergenerational and intragenerational distribution in a pay-as-you-go pension system. While each generation pays the pensions of the preceding generation, they also bear the burden of raising the next. The burden of child care is unevenly distributed within a generation. Demographic change affects the distribution across generations. To resolve both distributional issues this paper proposes to apply the rights-egalitarian sharing rule. Under this rule individual claims are fully respected; all gains or losses are divided equally. It can be shown that a rights-egalitarian pension system implements full compensation for human capital investments in a long-run equilibrium