Defined benefit pension schemes

A welfare analysis of risk sharing and labour market distortions

D.A.G. Draper, Ed Westerhout, A.G.H. Nibbelink

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Traditionally, collective defined benefit pension schemes have played an important role in the provision of pensions. Various trends such as population ageing put these schemes under serious pressure, however. Whether this is good or bad depends among other things on two factors: one is the value of the risk sharing between generations that is organized by pension schemes, and another is the cost of the distortions of labour supply decisions that these collective schemes imply. This paper constructs a model with overlapping generations of households and a pension scheme to assess the role of these two factors. The paper finds that the welfare gain from intergenerational risk sharing generally dominates the cost of labour supply distortions.
Original languageEnglish
Article number16
Pages (from-to)467-484
Number of pages18
JournalJournal of Pension Economics and Finance
Volume16
Issue number4
DOIs
Publication statusPublished - Oct 2017

Fingerprint

Pension scheme
Welfare analysis
Risk sharing
Labour market
Defined benefit
Labor supply
Factors
Costs
Population aging
Household
Intergenerational risk sharing
Pensions
Welfare gains
Overlapping generations

Cite this

@article{daca4c5247b14009ac5dbee9b0dc66f9,
title = "Defined benefit pension schemes: A welfare analysis of risk sharing and labour market distortions",
abstract = "Traditionally, collective defined benefit pension schemes have played an important role in the provision of pensions. Various trends such as population ageing put these schemes under serious pressure, however. Whether this is good or bad depends among other things on two factors: one is the value of the risk sharing between generations that is organized by pension schemes, and another is the cost of the distortions of labour supply decisions that these collective schemes imply. This paper constructs a model with overlapping generations of households and a pension scheme to assess the role of these two factors. The paper finds that the welfare gain from intergenerational risk sharing generally dominates the cost of labour supply distortions.",
author = "D.A.G. Draper and Ed Westerhout and A.G.H. Nibbelink",
year = "2017",
month = "10",
doi = "10.1017/S1474747215000074",
language = "English",
volume = "16",
pages = "467--484",
journal = "Journal of Pension Economics and Finance",
issn = "1474-7472",
publisher = "CAMBRIDGE UNIV PRESS",
number = "4",

}

Defined benefit pension schemes : A welfare analysis of risk sharing and labour market distortions. / Draper, D.A.G.; Westerhout, Ed; Nibbelink, A.G.H.

In: Journal of Pension Economics and Finance, Vol. 16, No. 4, 16, 10.2017, p. 467-484.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Defined benefit pension schemes

T2 - A welfare analysis of risk sharing and labour market distortions

AU - Draper, D.A.G.

AU - Westerhout, Ed

AU - Nibbelink, A.G.H.

PY - 2017/10

Y1 - 2017/10

N2 - Traditionally, collective defined benefit pension schemes have played an important role in the provision of pensions. Various trends such as population ageing put these schemes under serious pressure, however. Whether this is good or bad depends among other things on two factors: one is the value of the risk sharing between generations that is organized by pension schemes, and another is the cost of the distortions of labour supply decisions that these collective schemes imply. This paper constructs a model with overlapping generations of households and a pension scheme to assess the role of these two factors. The paper finds that the welfare gain from intergenerational risk sharing generally dominates the cost of labour supply distortions.

AB - Traditionally, collective defined benefit pension schemes have played an important role in the provision of pensions. Various trends such as population ageing put these schemes under serious pressure, however. Whether this is good or bad depends among other things on two factors: one is the value of the risk sharing between generations that is organized by pension schemes, and another is the cost of the distortions of labour supply decisions that these collective schemes imply. This paper constructs a model with overlapping generations of households and a pension scheme to assess the role of these two factors. The paper finds that the welfare gain from intergenerational risk sharing generally dominates the cost of labour supply distortions.

U2 - 10.1017/S1474747215000074

DO - 10.1017/S1474747215000074

M3 - Article

VL - 16

SP - 467

EP - 484

JO - Journal of Pension Economics and Finance

JF - Journal of Pension Economics and Finance

SN - 1474-7472

IS - 4

M1 - 16

ER -