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Social Security and self control preferences

Kumru, Cagri; Thanopoulos, Athanasios

Description

We analyze the welfare effects of an unfunded social security system. We do so using an overlapping generations economy wherein agents have self-control preferences, face mortality risk, individual income risk, and borrowing constraints. Given our specification of preferences, unfunded social security helps reduce the agents' temptation to consume in every period; consequently, the welfare costs it otherwise entails are substantially mitigated. While both social security and self-control when...[Show more]

CollectionsANU Research Publications
Date published: 2008
Type: Journal article
URI: http://hdl.handle.net/1885/31876
Source: Journal of Economic Dynamics and Control
DOI: 10.1016/j.jedc.2007.02.007

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