This paper studies the impact of variations of a pay-as-you-go pension system on welfare in a stochastic overlapping …, for a stationary population, any reduction of contribution rates once and for all leads to a long-run welfare improvement … generated retirement system keeping the welfare losses of current retirees sufficiently small. An unfavorable demographic change …

shows how the current tax, welfare, and pension systems create disincentives to work among these groups. The paper finds …