This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlappinggenerations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case, the funded country shares both in the costs and the benefits of the reform. However, if a Paretoimproving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed.
|Journal||International Tax and Public Finance|
|Publication status||Published - 2009|