Serveur d'exploration Hippolyte Bernheim

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A life cycle analysis of social security

Identifieur interne : 000940 ( Main/Exploration ); précédent : 000939; suivant : 000941

A life cycle analysis of social security

Auteurs : Ay E Mrohoroglu [États-Unis] ; Selahattin Mrohoroglu [États-Unis] ; Douglas H. Joines [États-Unis]

Source :

RBID : ISTEX:F04678920FE67BAB4AE7ABAD5E7CC5A5B2FE754E

English descriptors

Abstract

Summary: We develop an applied general equilibrium model to examine the optimal social security replacement rate and the welfare benefits associated with it. Our setup consists of overlapping generations of 65-period lived individuals facing mortality risk and individual income risk. Private credit markets, including markets for private annuities, are closed by assumption. Unlike previous analyses, we find that an unfunded social security system may well enhance economic welfare. In our benchmark economy, the optimal social security replacement rate is 30%, and an empirically more plausible replacement rate of 60% raises welfare compared with an economy with no social security system.

Url:
DOI: 10.1007/BF01213942


Affiliations:


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Le document en format XML

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<term>Computational details</term>
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<term>Decision rules</term>
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<term>Economic theory</term>
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<term>Future research</term>
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<term>Labor supply</term>
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<term>Last period</term>
<term>Life cycle</term>
<term>Life cycle model</term>
<term>Lifetime</term>
<term>Lifetime risks</term>
<term>Lifetime uncertainty</term>
<term>Lifetime utility</term>
<term>Liquidity</term>
<term>Liquidity constraints</term>
<term>Lower capital stock</term>
<term>Mandatory annuity contracts</term>
<term>Mandatory retirement</term>
<term>Market interest rate</term>
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<term>Nursing home expenditures</term>
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<term>Social security replacement rate</term>
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<div type="abstract" xml:lang="en">Summary: We develop an applied general equilibrium model to examine the optimal social security replacement rate and the welfare benefits associated with it. Our setup consists of overlapping generations of 65-period lived individuals facing mortality risk and individual income risk. Private credit markets, including markets for private annuities, are closed by assumption. Unlike previous analyses, we find that an unfunded social security system may well enhance economic welfare. In our benchmark economy, the optimal social security replacement rate is 30%, and an empirically more plausible replacement rate of 60% raises welfare compared with an economy with no social security system.</div>
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