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Private Versus Public Old-Age Security
SSRN Electronic Journal
2012
Abstract
We compare two institutions head on, a family compact – a parent makes a transfer to her parent in anticipation of a possible future gift from her children – with a pay-as-you-go, social security system in a lifecycle model with endogenous fertility wherein children are valued both as consumption and investment goods. Our focus is strictly on the pension dimension of these competing institutions. We show that an optimally-chosen family compact and a social security system cannot co-exist; indeed, the former may be preferred. A strong-enough negative shock to middle-age incomes destroys family compacts. While such a setting might appear ideal for the introduction of a social security system – as the experience of Europe, circa 1880s, would suggest – this turns out not to be the case: if incomes are too depressed to allow family compacts to flourish, they are also too low to permit introduction of an optimal social security system
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Details
- Title
- Private Versus Public Old-Age Security
- Creators
- Richard C Barnett - Drexel University
- Publication Details
- SSRN Electronic Journal
- Publisher
- SSRN
- Resource Type
- Other
- Language
- English
- Academic Unit
- Economics (School of Economics); Bennett S. LeBow College of Business; Drexel University
- Other Identifier
- 991019551545404721