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Retirement in an overlapping generations model

Published online by Cambridge University Press:  17 August 2016

Leon Bettendorf  and
Guido Pepermans
Leon Bettendorf
Affiliation:
Netherlands Bureau for Economic Policy Analysis, Den Haag
Guido Pepermans
Affiliation:
School of Economics, Sint-Aloysius, Brussels, and Center for Economic Studies, University of Leuven
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Summary

With an overlapping generations model, Williamson and Jones [1983] demonstrated that the long-run savings ratio in the U.S. was not affected by the introduction and the reform of the unfunded social security system. This paper extends their model by including a production sector, endogenous labor supply and a wage profile. Simulations show that incorporating general equilibrium and (exogenous) leisure is sufficient to generate a declining savings ratio in the steady state. Reforms of the social security system are evaluated in welfare terms. The new features of the model may significantly change the sign and the magnitude of the welfare gains for steady state generations.

Résumé

Résumé

En utilisant un modèle de générations imbriquées, Williamson et Jones [1983] ont démontré que le taux d'épargne de long terme aux USA n'est pas affecté par l'introduction et la réforme d'une sécurité sociale sans capitalisation. Cet article étend leur modèle en introduisant un secteur productif, une offre de travail endogène et un profil de salaire. Les simulations montrent que l'adoption d'une perspective d'équilibre général et l'introduction du loisir (exogène) suffisent à générer une baisse du taux d'épargne à l'équilibre. Les réformes du système d'assurance sociale sont évaluées en terme de bien être. Les nouvelles caractéristiques du modèle peuvent considérablement changer le signe et la grandeur des gains sociaux.

Keywords

D58D91H55D58D91H55
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 63 , Issue 4 , 1997 , pp. 367 - 387
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1997 

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Footnotes

(*)

The authors are obliged to F. Abraham, C. de Vries, M. Marchand, P. Pestieau, S. Proost, E. Schokkaert, F. Spinnewyn, D. Van de Gaer and P. Van Rompuy for their helpful comments on earlier drafts of this paper. Any errors are, of course, ours.

References

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