Original scientific paper

Redistribution, Pension Systems and Capital Accumulation

Christophe Hachon ; Centre d’Economie de La Sorbonne, University Paris 1 Panthéon-Sorbonne

Abstract

In this paper we study the macroeconomic impact of a policy which changes the redistributive properties of an unfunded pension system. Using an overlapping generations model with a closed economy and heterogeneous agents, we show that a weaker link between contributions and benefits has an impact on the level of capital per capita if and only if there are inequalities in the length of life. Furthermore, this policy has positive implications for every economic agent if the system has a defined-benefit structure. The tax rate and inequalities decrease, whereas the wealth of each agent increases. However, with a defined-contribution pension system, this policy has a negative impact on every macroeconomic variable except on the wealth of the poorest agents.

Keywords

inequality; pension systems; redistribution; capital

Hrčak ID:

34877

URI

https://hrcak.srce.hr/34877

Publication date:

11.11.2008.

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