We ask whether a pay-as-you-go financed social security system is welfare improving in an economy with idiosyncratic … productivity and aggregate business cycle risk. We show analytically that the whole welfare benefit from joint insurance against … convexity of the welfare gain in total risk. The other reason is a direct risk interaction which amplifies the utility losses …

are orthogonal by construction. While the interactions unambiguously increase the welfare benefits from insurance, they … can in- or decrease the welfare costs from crowding out of capital formation. The net effect depends on the relative …

We ask whether a pay-as-you-go financed social security system is welfare improving in an economy with idiosyncratic … productivity and aggregate business cycle risk. We show analytically that the whole welfare benefit from joint insurance against … convexity of the welfare gain in total risk. The other reason is a direct risk interaction which amplifies the utility losses …

We ask whether a PAYG-financed social security system is welfare improving in an economy with idiosyncratic and … with a contribution rate of two percent leads to welfare gains of 2.2% of lifetime consumption in expectation, despite … substantial crowding out of capital. This welfare gain stands in contrast to the welfare losses documented in the previous …

over the life-cycle. The interactions appear even though the two risks are orthogonal and they amplify the welfare … consequences of introducing social security. On the one hand, the interactions increase the welfare benefits from insurance. On the … other hand, they can in- or decrease the welfare costs from crowding out of capital formation. This ambiguous effect on …

We ask whether a PAYG-financed social security system is welfare improving in an economy with idiosyncratic and … with a contribution rate of two percent leads to welfare gains of 2.2% of lifetime consumption in expectation, despite … substantial crowding out of capital. This welfare gain stands in contrast to the welfare losses documented in the previous …

We ask whether a PAYG-financed social security system is welfare improving in an economy with idiosyncratic and … with a contribution rate of two percent leads to welfare gains of 2.2% of lifetime consumption in expectation, despite … substantial crowding out of capital. This welfare gain stands in contrast to the welfare losses documented in the previous …

over the life-cycle. The interactions appear even though the two risks are orthogonal and they amplify the welfare … consequences of introducing social security. On the one hand, the interactions increase the welfare benefits from insurance. On the … other hand, they can in- or decrease the welfare costs from crowding out of capital formation. This ambiguous effect on …