The goal of this paper is to determine the effects of different social security regimes on job search. A less generous pension system induces higher savings across the life cycle and makes agents wealthier and thus more reluctant to accept low wage offers. On the other hand, as the social...

We investigate why social security arose when it did in the United States to replace family based old-age care. We hypothesize that increases in life-expectancy (conditional on reaching adulthood) interrupted the traditional familial transfer of land on the farm and also led to crowding of that...

Financing retirement benefits is probably the most significant fiscal challenge that governments in industrial economies will be facing in the next few decades. Social security reform has therefore become an important public policy issue for many countries and various reform proposals have been...

We analyze the sustainability of intergenerational transfers in politico-economic equilibrium. We argue that these transfers naturally arise in a Markov perfect equilibrium in the fundamental state variables. In contrast to earlier literature, our explanation does not resort to altruism,...

In a stochastic economy with overlapping generations, fiscal policy affects the allocation of aggregate risks. The paper shows how to compute the welfare effects of marginal policy changes that shift risk across cohorts, in general and for an application to social security equity investments. I...

We examine the possibility of a Pareto-improving pay-as-you-go social security system, using an ex-ante welfare criterion. Our objective is to identify the conditions under which a suitably designed pay-as-you-go social security system is welfare improving, when markets are complete and...

The paper derives conditions for ex ante efficient intergenerational risk sharing in overlapping generations models. I show how the efficiency of a fiscal policy can be evaluated without distributional judgments, I derive efficiency conditions, and then examine specific models. For models with...

In this paper we analyze tax and transfer choices in an OLG economy with capital accumulation and endogenous growth coming from public investment, such as education. We solve for a Markov perfect equilibrium when electoral competition targets the votes of young and old households. We find that...

Bismarckian social security systems are associated with larger public pension expenditures, a smaller fraction of private pension and lower income inequality than Beveridgean systems. This paper introduces a bidimensional voting model to account for all these features. Agents differ in age,...