Economics, Econometrics and Finance
4 years ago

Unfunded pensions distort labor supply decisions, leading to welfare losses.

RePEc: Research Papers in Economics
Welfare effects of unfunded pension systems when labor supply is endogenous
Friedrich Breyer, Martin Straub

Paper Summary

A pension system without funds can cause problems if it affects how much people work. A study looked at this in a model of a closed economy with different generations. They found that getting rid of unfunded pensions gradually can make things better for everyone. This builds on a previous study that looked at a similar idea in a different type of economy.

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