Social security and intergenerational redistribution
Journal or Book Title
Structural Models of Wage and Employment Dynamics
First Page or Article ID Number
Many countries around the world have large public pension programs with significant cross-cohort redistribution. This paper provides a rationale for such programs in a lifecycle framework with search and matching frictions in the labor market. In the model, public pension programs alter the age composition of the labor force by inducing the jobless elderly to retire. This improves the allocation of workers to jobs, raises firm entry and may also improve welfare. By requiring a long history of labor market attachment as a precondition to receiving benefits, these programs raise the future value of current employment for the young. This redistributes bargaining strength and income from the young to the old.
J41, J64, E24
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Emerald Group Publishing Limited
Bhattacharya, Joydeep and Reed, Robert R., "Social security and intergenerational redistribution" (2006). Economics Publications. 610.