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A note on intergenerational risk sharing and the design of pay-as-you-go pension programs

Abstract.

Different versions of pay-as-you-go public pension programs may have entirely different effects on the intergenerational distribution of income risk. If the pension benefit is a fixed proportion of previous labor income, a pay-as-you-go program increases the net income risk of all generations. On the other hand, a pay-as-you-go program characterized by a fixed labor income tax rate and uncertain pension benefits provides intergenerational risk sharing.

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Received: 10 December 1996 / Accepted: 24 November 1997

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Thøgersen, Ø. A note on intergenerational risk sharing and the design of pay-as-you-go pension programs. J Popul Econ 11, 373–378 (1998). https://doi.org/10.1007/s001480050074

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  • DOI: https://doi.org/10.1007/s001480050074

  • Key words: Intergenerational risk sharing
  • social security
  • public pension programs
  • JEL classification: H55