Social Security Reform with Impure Intergenerational Altruism
35 Pages Posted: 27 Mar 2009
Date Written: March 25, 2009
This paper studies the long-run aggregate and welfare effects of eliminating Social Security in a quantitative dynamic general equilibrium life-cycle model where parents and their children are linked by voluntary and accidental bequests. Social security in this model with impure altruism has a smaller effect on capital accumulation than in a pure life-cycle model, a bigger effect than in a model with two-sided altruism. The welfare gain of eliminating Social Security system under impure altruism is smaller than in a pure life-cycle model, and bigger than in a model with two-sided altruism.
Keywords: Social Security, Altruism, Heterogeneous agents, Welfare
JEL Classification: C68, D52, E6, H55
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