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Pareto improving transition from a pay-as-you-go to a fully funded pension system in a model of endogenous growth

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In this paper we investigate the possibility of Pareto improving social security reforms within a framework of endogenous growth. Belan et al. (1998) propose a transition from a pay-as-you-go (PAYG) pension system to a system of savings–subsidization. We follow this approach and prove that a Pareto improving conversion from the PAYG system to a fully funded one is possible. Finally, we compare the subsidy system with the fully funded system and discuss the problem of implementing the transition to the fully funded system.

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Received: 07 March 1999/Accepted: 13 December 1999

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Gyárfás, G., Marquardt, M. Pareto improving transition from a pay-as-you-go to a fully funded pension system in a model of endogenous growth. J Popul Econ 14, 445–453 (2001). https://doi.org/10.1007/s001480000030

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  • DOI: https://doi.org/10.1007/s001480000030

  • JEL classification: H55
  • Key words: Public pensions
  • endogenous growth