Social Security and Public Insurance
Forthcoming in Piggott, J. and Woodland, A. (Eds.), Handbook of the Economics of Population Aging, Elsevier
101 Pages Posted: 6 Oct 2016
Date Written: September 8, 2016
When the challenges of population aging are being debated, the uncertain future of pension systems is a topic of high priority and large controversy. The aim of this chapter is not to provide a “consensus view” on social security and public insurance in aging populations but to put structure on these debates. We formulate a large set of models which we use for simulation exercises to make the challenges and controversies more transparent. The chapter begins with an institutional view of pension systems and population aging which defines the fundamental accounting restrictions which population aging imposes on individual behavior and policy actions. We also provide a brief survey of pension systems in the real world. We then take a behavioral view and study saving and labor supply decisions in an aging population. The third viewpoint is from macroeconomics and focuses on the feedback effects that occur in general equilibrium. We demonstrate that market reactions to population aging significantly reduce the burden of parametric or systemic pension reform. The chapter ends with a short summary of the main lessons and an outlook where further research is most urgently needed.
Keywords: population aging, social security, public insurance, pension reform, life-cycle saving, labor supply, retirement age, welfare, intergenerational risk sharing
JEL Classification: C68, D64, D91, E17, E21, F21, H55, J11, J22, J26
Suggested Citation: Suggested Citation