Pension reform with migration and mobile capital

Is a Pareto improvement possible?

I. Fedotenkov, A.C. Meijdam

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper shows that in a two-country two-overlapping-generations model with migration, capital mobility and an immobile production factor (land), a locally welfare-improving pension reform at the cost of the neighboring country is possible if land plays a minor role in production. Furthermore, differences in the size of the PAYG pension schemes between the countries distort the international allocation of labour and capital. As a result, a Pareto-improving pension reform is possible if countries employ PAYG pension schemes of different size, provided that a federal government exists that redistributes benefits and losses of the reform both intergenerationally and internationally.
Original languageEnglish
Pages (from-to)431-450
JournalInternational Economics and Economic Policy
Volume11
Issue number3
Early online date27 Sep 2013
DOIs
Publication statusPublished - Sep 2014

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Pay-as-you-go tax
Pension scheme
Pension reform
Pareto improvement
Pareto
Federal government
Capital mobility
Overlapping generations model
Labor
Factors

Cite this

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title = "Pension reform with migration and mobile capital: Is a Pareto improvement possible?",
abstract = "This paper shows that in a two-country two-overlapping-generations model with migration, capital mobility and an immobile production factor (land), a locally welfare-improving pension reform at the cost of the neighboring country is possible if land plays a minor role in production. Furthermore, differences in the size of the PAYG pension schemes between the countries distort the international allocation of labour and capital. As a result, a Pareto-improving pension reform is possible if countries employ PAYG pension schemes of different size, provided that a federal government exists that redistributes benefits and losses of the reform both intergenerationally and internationally.",
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Pension reform with migration and mobile capital : Is a Pareto improvement possible? . / Fedotenkov, I.; Meijdam, A.C.

In: International Economics and Economic Policy, Vol. 11, No. 3, 09.2014, p. 431-450.

Research output: Contribution to journalArticleScientificpeer-review

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AU - Meijdam, A.C.

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