SFB 303 Discussion Paper No. A - 588

Author: Gyarfas, G., and Marquardt, M.
Title: The Pareto-Improving Transition from a Pay-As-You-Go System to a Fully Funded System in a Model of Endogenous Growth
Abstract: In this paper we investigate the possibilities of Pareto-improving reforms of a pay-as-you-go (PAYG) pension system in a framework of endogenous growth. Belan et al. (1996) propose a transition of a PAYG 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 analyze the question of whether a PAYG system supplemented by a subsidy scheme can generate the same growth as a fully funded system.
Keywords: Public Pensions, Endogenous Growth
JEL-Classification-Number: H55
Creation-Date: November 1998
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