Pareto-improving Pension Reform when some are Altruistic
نویسنده
چکیده
The paper discusses whether a Pareto-improving cut back of a pay-as-you-go (PAYGO) system of social security is feasible if there is an altruistic motive for making positive bequests. The paper argues that this cut back is possible if the PAYGO system relies on distorting labor taxes. Even in the case when only a fraction of the current old have an altruistic bequest motive it may be possible to carry out such an improvement. In this case a Pareto-improving cut back of the social security system has to be complemented by an intragenerational redistribution from individuals with children to those without kids. Alfons J. Weichenrieder Goethe-University Frankfurt Mertonstr. 17 60054 Frankfurt Germany Email: [email protected]
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