Voting on Parametric Reforms of the Pay-As-You-Go Pension System
35 Pages Posted: 2 Dec 2008
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Voting on Parametric Reforms of the Pay-As-You-Go Pension System
Date Written: October 2008
Abstract
We assess the political support for parametric reforms of the Pay-As-You-Go pension system following a downward fertility shock. Using a continuous time overlapping generations model, we show that, for a large class of utility functions, the majority of the population favor a cut in pension benefits over an increase in the contribution rate. Our framework also allows us to evaluate the political support for raising the retirement age and to determine how the timing of the different reforms affect their political support.
Keywords: fertility shock, parametric reforms, Pay-As-You-Go
JEL Classification: D72, H55
Suggested Citation: Suggested Citation
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