Social Security and Macroeconomic Risk in General Equilibrium

Time: 2011, Tuesday January 17th, 13.00-14.00 hours
Location:CPB-office, Van Stolkweg 14, The Hague

Presentation: Peter Broer (CPB-Tilburg University)

Discussant: Ed Westerhout (CPB)

Language: English

Registration:  Please register by sending an email to seminars@cpb.nl.

Abstract subject: This paper studies the interaction between macro-economic risks, and paygo social security. For this, it uses an applied general equilibrium model with overlapping generations of riskaverse households. The sources of risk are productivity shocks and capital return shocks. The risk profile of pensions differs from that of financial assets, because pensions are linked partially to future wage rates and productivity. The model is used to discuss the effects social security on labor supply, private saving, and welfare in a closed economy. Results show that the welfare effects of paygo social security are negative as crowding out dominates the positive insurance effects.

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