Borgmann Social Security, Demographics, and Risk

2005
ISBN: 978-3-540-26697-6
Verlag: Springer Berlin Heidelberg
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 178 Seiten

Reihe: Population Economics

This volume addresses the most important issues of the ongoing discussion on designing social security. It provides fundamental results for pay-as-you-go social security, covers the issues of social security during demographic transition and examines the inclusion of risk aspects into the analysis of social security. An empirical case study of Germany yields the surprising result that de facto the German public pension scheme already comprises an implicit demographic factor. This book allows a subtle understanding of how interacting risks are treated within different pension systems and thereby provides a basis for the development of innovative ways of risk sharing.

Autoren/Hrsg.

Borgmann, Christoph Hendrik

Inhaltsverzeichnis

1;Preface;7
2;Contents;8
3;List of Symbols;12
3.1;List of Abbreviations;13
3.2;Abbreviations for the German benefit formula;14
4;Chapter 1 Introduction;15
5;Chapter 2 Fundamental Results on Social Security in a Deterministic Economy;19
5.1;2.1 PAYG versus Funded Social Security under Certainty;20
5.2;2.2 The Equivalence of Public Debt and Social Security;22
5.3;2.3 The Present Value of the Perpetual Implicit Tax of PAYG Social Security;26
5.4;2.4 The Typology of Social Security and Further Issues;31
5.5;2.5 Summary;39
6;Chapter 3 Social Security and Demographic Transition;45
6.1;3.1 Demographic Trends Around the World;45
6.2;3.2 Implications of Demographic Transition;56
7;Chapter 4 Old- Age Provision and Uncertainty: An Introduction to Issues of Risk and Risk Sharing;65
7.1;4.1 A Primer on Intergenerational Risk Sharing and Social Security;65
7.2;4.2 Old-Age Income and Sources of Aggregate Risk;68
7.3;4.3 Overview;73
8;Chapter 5 Labor Income Risk, Demographic Risk, and the Design of ( Wage- Indexed) Social Security;77
8.1;5.1 A Simple Overlapping Generations Model with Stochastic Labor Income and Stochastic Population Growth;78
8.2;5.2 PAYG Pension Programs in a Small Open Economy with Stochastic Labor Income and Population Growth;80
8.3;5.3 Defined Contribution and Defined Benefits in a Closed Economy;85
8.4;5.4 Between Defined Contribution and Defined Benefit: Optimal Demographic Indexation;89
8.5;5.5 Further Issues;93
8.6;5.6 Summary;96
9;Chapter 6 Demographics and Political Risks of Benefit Rule Changes: A Case Study for Germany;99
9.1;6.1 A Chronicle of the German Benefit Formula;101
9.2;6.2 The Volatility of Individual Social Security Wealth: A Cohort Analysis of the Generosity of the Benefit Rule;113
9.3;6.3 Demographics and Population Projections;123
9.4;6.4 Demographic Development and Benefit Rule Changes;127
9.5;6.5 Future Changes: What Does It Take To Make the GRV Sustainable?;132
9.6;6.6 Summary;139
10;Chapter 7 Social Security, Portfolio Choice, and Financial Markets;141
10.1;7.1 Social Security and Optimal Portfolio Diversification;141
10.2;7.2 Social Security and Financial Instruments;160
11;Chapter 8 Conclusion;167
12;Appendices ;169
12.1;A Mathematical Appendix;169
12.1.1;A.1 Derivation of the Variance of yDC;169
12.1.2;A.2 Derivation of the Variance of yDBt in a Small Open Economy;169
12.1.3;A.3 Derivation of the Variance of yDBt with Macroeconomic Feedback;170
12.1.4;A.4 Proof that E[yt] is Strictly Increasing in .;171
12.1.5;A.5 Derivation of the Variance Under the General Demographic Indexation Policy in a Closed Economy;171
12.1.6;A.6 The Effect of Changing the Statistical Calculation of the Benefit Formula;172
12.2;B Appendix: Tables;175
12.2.1;B.1 Regions and Country-Groups;175
12.2.2;B.2 Further Information on the GRV;176
12.2.3;B.3 Tables for Efficient Portfolio Frontier;178
13;References;179