Intergenerational risk sharing by funded pension schemes may increase welfare in an ex ante sense. However, it also suffers from a time inconsistency problem. In particular, young generations may be unwilling to start participating in a pension scheme if this requires them to make huge transfers...

This chapter reviews the literature on intergenerational risk sharing (IRS). We explore to what extent and how a market economy with an appropriate institutional setting can replicate a social planner's solution in models with increasing levels of complexity. In particular, we do this for...

Using an overlapping generations model, two new indicators of public pension system sustainability are proposed: the pension space, which measures the capacity to pay for pension expenditures out of labour taxation, and the pension space exhaustion probability reflecting demographic...

This paper explores the partial equilibrium effects of the social security system in an overlapping generations economy, where individuals are distinguished according to their skills/productivity type. The emphasis is placed on building a parameterized model of the social security system in 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...