We analyze the political stability of funded social security. Using a stylized theoretical framework we study the mechanisms behind governments capturing social security assets in order to lower current taxes. The results and the driving mechanisms carry over to a fully-fledged and carefully...

Why are social security transfers associated with retirement rules? This paper focuses on the political interactions between retirement and social security. Using a probabilistic voting approach, it analyzes why old people are induced to retire in order to receive pension transfers from the...

I show that, in a benchmark OLG model with a Cobb-Douglas production function, returns to the pay-as-you-go system and the funded system are perfectly correlated in the presence of uncertainty about future technology, demography and capital stock. Therefore, uncertainty as such might not be a...

We evaluate the likelihood of different reforms of an unsustainable pay-as-you-go pension system. Individual agents' preferences are determined for 15 age groups and all possible levels of wealth to account for expectations held prior to a reform. Moreover, we introduce "indifference bands" in...

We introduce intergenerational transfers into a general equilihrium life-cycle model in order to explain observed levels of wealth heterogeneity. In our overlapping generations model, heterogenous agents face uncertain lifetime and leave both accidental and voluntary bequests to their cinldren....