Privatizing Social Security
نویسنده
چکیده
This paper studies the political sustainability of the existing pay-as-you-go Social Security system in the face of recent demographic patterns. We analyze different approaches to privatizing the system and consider what it would require for them to be politically implementable. The analysis is based on an overlapping-generations economy where an initial generation would choose to implement a pay-asyou-go social insurance system. We study the sustainability of this system in each subsequent period. We describe some transition policies that make the current generations of agents at least as well off as the maintenance of the Social Security system. All feasible transition policies use debt to finance the benefits during the transition period, shifting at least some of the cost to unborn generations. © 1999
منابع مشابه
Privatizing Social Security: the Chilean experience.
In 1981, Chile introduced a new approach to social insurance, a system of individual capitalization accounts financed solely by the employee. This new privatized system was an improvement over Chile's failing pay-as-you-go arrangement. As many countries worldwide are facing financial problems with their social security system, they are now looking to the Chilean model in trying to find solution...
متن کاملPrivatizing Social Security: the Role of Imperfect Substitution between Less and More Experienced Workers
Abstract In this paper we use a large overlapping generations model with individuals that differ across age and productivity to assess the effect of privatizing a pay-as-you-go social security system in two model economies. The first one is the standard model pioneered by Auerbach and Kotlikoff (1987) characterized by the perfect substitutability in production of individuals with different expe...
متن کاملPrivatizing Sociffl Security: The Chilean Experience
In 198 1, Chile introduced a new approach to social insurance, a system of individual capitalization accounts financed solely by the employee. This new privatized system was an improvement over Chile’s failing pay-asyou-go arrangement. As many countries worldwide are facing financial problems with their social security system, they are now looking to the Chilean model in trying to find solution...
متن کاملElimination of Social Security in a Dynastic Framework
Much of the existing literature on social security has taken the extreme assumption that individuals have little or no altruism; this paper takes an opposite assumption that there is full two-sided altruism. When households insure members that belong to the same family line, privatizing social security can gain public support. In our benchmark model calibrated to the U.S. economy, privatization...
متن کاملA critique of the case for privatizing Social Security.
This article presents and then critiques arguments made by those advocating the privatization of Social Security. It refutes the argument that baby boomers will find themselves without Social Security pensions unless fundamental changes are made. It questions the claims that privatization would increase economic growth, reduce the federal deficit, make the nation more competitive in the global ...
متن کامل