A positive theory of the income redistributive focus of social security

dc.contributor.author Bhattacharya, Joydeep
dc.contributor.author Reed, Robert
dc.contributor.department Economics
dc.date 2018-02-17T18:19:00.000
dc.date.accessioned 2020-06-30T02:12:24Z
dc.date.available 2020-06-30T02:12:24Z
dc.date.issued 2003-11-26
dc.description.abstract <p>Many countries around the world have large public pension programs. Traditionally, these programs have been used to induce retirement by the elderly in order to free up jobs for the young and to redistribute income across generations. This paper provides an efficiency rationale for the inter-generational income redistribution focus of such programs in a framework which explicitly accounts for the role of the lifecycle as well as search and matching frictions in the labor market. In our model, public pension programs alter the age composition of the labor force by inducing the jobless elderly to retire. By requiring a long history of labor market attachment in order to receive benefits, these programs raise the future value of current employment for the young which serves to redistribute bargaining power, and hence income, from the young to the old. The paper argues that pension programs through their effect on the wage structure, the age distribution of the labor force and firm entry decisions, can improve the operation of the labor market and might therefore be desirable on efficiency grounds alone (abstracting from equity and insurance motives). It shows that a pension program that is funded from within the economy can lead to higher welfare than having no pension program at all.</p>
dc.format.mimetype application/pdf
dc.identifier archive/lib.dr.iastate.edu/econ_las_workingpapers/187/
dc.identifier.articleid 1186
dc.identifier.contextkey 8804257
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath econ_las_workingpapers/187
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/22408
dc.source.bitstream archive/lib.dr.iastate.edu/econ_las_workingpapers/187/p1813_2003_07_25.pdf|||Fri Jan 14 21:45:43 UTC 2022
dc.subject.disciplines Economics
dc.subject.keywords search
dc.subject.keywords labor market efficiency
dc.subject.keywords unemployment
dc.subject.keywords lifecycle
dc.subject.keywords pensions
dc.title A positive theory of the income redistributive focus of social security
dc.type article
dc.type.genre working_paper
dspace.entity.type Publication
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relation.isOrgUnitOfPublication 4c5aa914-a84a-4951-ab5f-3f60f4b65b3d
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