2013
DOI: 10.1257/aer.103.3.502
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Optimal Pension Systems with Simple Instruments

Abstract: We analyze optimal pension systems relying on simple policy instruments in a lifecycle environment which admits endogenous decisions of how much to work as well as when to retire. The optimality in this context means the highest welfare that can be achieved within a restricted set of instruments, while keeping the total cost of the pension system unchanged. The policy instruments we consider are the optimized retirement benefit functions modeled after a stylized version of the current US Social Security.

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Cited by 18 publications
(14 citation statements)
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“…At the old age, 6 Utilitarianism also prevails in optimal retirement age studies in a dynamic setting (see Crettez and Le Maitre, 2002;Michel and Pestieau, 2002;Lacomba and Lagos, 2006). 7 Those recent articles pay particular attention to the design of an optimal pension system in a second-best environment, because of a limited set of policy instruments (Shourideh and Troshkin, 2012;Golosov et al, 2013) or because of adverse selection (Hosseini, 2014). agents can still work some subperiod, of length z, and are retired over the remaining subperiod of length 1 − z.…”
Section: Identical Individuals Facing Mortality Riskmentioning
confidence: 99%
See 1 more Smart Citation
“…At the old age, 6 Utilitarianism also prevails in optimal retirement age studies in a dynamic setting (see Crettez and Le Maitre, 2002;Michel and Pestieau, 2002;Lacomba and Lagos, 2006). 7 Those recent articles pay particular attention to the design of an optimal pension system in a second-best environment, because of a limited set of policy instruments (Shourideh and Troshkin, 2012;Golosov et al, 2013) or because of adverse selection (Hosseini, 2014). agents can still work some subperiod, of length z, and are retired over the remaining subperiod of length 1 − z.…”
Section: Identical Individuals Facing Mortality Riskmentioning
confidence: 99%
“…Those recent articles pay particular attention to the design of an optimal pension system in a second‐best environment, because of a limited set of policy instruments (Shourideh and Troshkin, ; Golosov et al., ) or because of adverse selection (Hosseini, ).…”
mentioning
confidence: 99%
“…There is a growing literature that studies the optimal design of a pension system (e.g., Golosov et al (2013), Shourideh and Troshkin (2017), Huggett and Parra (2010) and Hosseini and Shourideh (2019)). In particular, Hosseini and Shourideh (2019) study Pareto optimal policy reforms aimed at overhauling retirement …nancing as part of a comprehensive …scal policy in the US.…”
Section: Introductionmentioning
confidence: 99%
“…1 This goal is implemented through a progressive replacement rate (Golosov et al, 2013). However, the recent increasing gap in life expectancy by socioeconomic status can undermine the progressivity of the system.…”
Section: Motivationmentioning
confidence: 99%
“…More recently, the role of heterogeneity in longevity and its implications for earnings-related pensions has been discussed by Ayuso et al (2016), finding that the pension benefits of long lived and well-educated individuals are being subsidized by short lived and less educated individuals. To contribute to the literature, we compare the main retirement benefit program of the US pension system (OASDI), which is based on a progressive replacement rate (Golosov et al, 2013), to a pension system with a non progressive replacement rate, such as those in many European countries.…”
Section: Motivationmentioning
confidence: 99%