Should a pension reform be announced? A reply
Should a pension reform be announced? A reply
Fedotenkov (2016) shows that a reduction in the pay-as-you-go (PAYG) contribution rate leads to larger welfare losses for the first transitional generation if the reform is announced in advance. His analysis is based on expected lifetime utility at the reform announcement date. This note reconsiders the reform from the alternative perspective of implementation date. It argues that an announced reform may be preferable because it raises realized consumption of the first transitional generation in old age. Implications for social welfare evaluations are illustrated with a numerical example.
Hatcher, Michael
e0846252-6d46-44f8-ba3c-05cf1fba64ab
October 2019
Hatcher, Michael
e0846252-6d46-44f8-ba3c-05cf1fba64ab
Abstract
Fedotenkov (2016) shows that a reduction in the pay-as-you-go (PAYG) contribution rate leads to larger welfare losses for the first transitional generation if the reform is announced in advance. His analysis is based on expected lifetime utility at the reform announcement date. This note reconsiders the reform from the alternative perspective of implementation date. It argues that an announced reform may be preferable because it raises realized consumption of the first transitional generation in old age. Implications for social welfare evaluations are illustrated with a numerical example.
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Pension_reform_note_RevisedF
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Accepted/In Press date: 31 July 2019
e-pub ahead of print date: 2 August 2019
Published date: October 2019
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Local EPrints ID: 433505
URI: http://eprints.soton.ac.uk/id/eprint/433505
ISSN: 0165-1765
PURE UUID: 25978e1d-ab63-4f47-8d2f-159e2778cc76
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Date deposited: 23 Aug 2019 16:30
Last modified: 16 Mar 2024 08:07
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