Designing a linear pension scheme with forced savings and wage heterogeneity

"This paper studies the optimal linear pension scheme when society consists of rational and myopic individuals. Myopic individuals have, ex ante, a strong preference for the present even though, ex post, they would regret not to have saved enough. While rational and myopic persons share the sam...

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Autores Principales: Cremer, Helmuth, De Donder, Philippe, Maldonado, Dario, Pestieau, Pierre
Formato: Artículo (Article)
Lenguaje:Inglés (English)
Publicado: 2008
Materias:
Acceso en línea:https://repository.urosario.edu.co/handle/10336/22182
https://doi.org/10.1007/s10797-007-9031-2
id ir-10336-22182
recordtype dspace
spelling ir-10336-221822021-01-21T08:19:34Z Designing a linear pension scheme with forced savings and wage heterogeneity Cremer, Helmuth De Donder, Philippe Maldonado, Dario Pestieau, Pierre Dual-self model Myopia Social security "This paper studies the optimal linear pension scheme when society consists of rational and myopic individuals. Myopic individuals have, ex ante, a strong preference for the present even though, ex post, they would regret not to have saved enough. While rational and myopic persons share the same ex post intertemporal preferences, only the rational agents make their savings and labor supply decisions according to these preferences. Individuals are also distinguished by their productivity. The social objective is ""paternalistic"": the utilitarian welfare function depends on ex post utilities. We examine how the presence of myopic individuals affects both the size of the pension system and the degree of redistribution it operates, with and without liquidity constraints. The relationship between proportion of myopic individuals and characteristics of the pension system turns out to be much more complex than one would have conjectured. Neither the impact on the level of pensions nor the effect on their redistributive degree is unambiguous. Nevertheless, we show that under some plausible assumptions adding myopic individuals increases the level of pension benefits and leads to a shift from a flat or even targeted scheme to a partially contributory one. However, we also provide an example where the degree of redistribution is not a monotonic function of the proportion of myopic individuals. © 2007 Springer Science+Business Media, LLC." 2008 2020-05-25T23:55:42Z info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion 15736970 09275940 https://repository.urosario.edu.co/handle/10336/22182 https://doi.org/10.1007/s10797-007-9031-2 eng info:eu-repo/semantics/openAccess application/pdf instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR
institution EdocUR - Universidad del Rosario
collection DSpace
language Inglés (English)
topic Dual-self model
Myopia
Social security
spellingShingle Dual-self model
Myopia
Social security
Cremer, Helmuth
De Donder, Philippe
Maldonado, Dario
Pestieau, Pierre
Designing a linear pension scheme with forced savings and wage heterogeneity
description "This paper studies the optimal linear pension scheme when society consists of rational and myopic individuals. Myopic individuals have, ex ante, a strong preference for the present even though, ex post, they would regret not to have saved enough. While rational and myopic persons share the same ex post intertemporal preferences, only the rational agents make their savings and labor supply decisions according to these preferences. Individuals are also distinguished by their productivity. The social objective is ""paternalistic"": the utilitarian welfare function depends on ex post utilities. We examine how the presence of myopic individuals affects both the size of the pension system and the degree of redistribution it operates, with and without liquidity constraints. The relationship between proportion of myopic individuals and characteristics of the pension system turns out to be much more complex than one would have conjectured. Neither the impact on the level of pensions nor the effect on their redistributive degree is unambiguous. Nevertheless, we show that under some plausible assumptions adding myopic individuals increases the level of pension benefits and leads to a shift from a flat or even targeted scheme to a partially contributory one. However, we also provide an example where the degree of redistribution is not a monotonic function of the proportion of myopic individuals. © 2007 Springer Science+Business Media, LLC."
format Artículo (Article)
author Cremer, Helmuth
De Donder, Philippe
Maldonado, Dario
Pestieau, Pierre
author_facet Cremer, Helmuth
De Donder, Philippe
Maldonado, Dario
Pestieau, Pierre
author_sort Cremer, Helmuth
title Designing a linear pension scheme with forced savings and wage heterogeneity
title_short Designing a linear pension scheme with forced savings and wage heterogeneity
title_full Designing a linear pension scheme with forced savings and wage heterogeneity
title_fullStr Designing a linear pension scheme with forced savings and wage heterogeneity
title_full_unstemmed Designing a linear pension scheme with forced savings and wage heterogeneity
title_sort designing a linear pension scheme with forced savings and wage heterogeneity
publishDate 2008
url https://repository.urosario.edu.co/handle/10336/22182
https://doi.org/10.1007/s10797-007-9031-2
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score 11,828437