Aggregate implications of defined benefit and defined contribution systems

Aggregate implications of defined benefit and defined contribution systems

Aggregate implications of defined benefit and defined contribution systems

Gomes

Francisco

Gomes, Francisco

Author

Author

Michaelides

Alexander

Michaelides, Alexander

Author

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20032003monographic

Chestnut Hill, Mass.

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2003

2003

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

We use a general equilibrium life-cycle model with incomplete markets and heterogeneous agents to evaluate the macroeconomic and welfare implications of Defined Benefit (DB) versus Defined Contribution (DC) systems, and to investigate the effects of incremental reform within a particular system. Extensive calibrations illustrate the trade-off between effciency and redistribution that a tax-financed, DB social security system generates. We find that social welfare is maximized for small but positive levels of DB because of the redistributive value associated with these systems. On the other hand, steady-state within-DC system comparisons reveal that a zero DC tax rate maximizes social welfare.

Francisco Gomes and Alexander Michaelides.

CRR WP2003-16

CRR WP2003-16

CRR WP

2003-16

http://crr.bc.edu/images/stories/Working_Papers/wp_2003-16.pdf

MChBEnglisheng

MChB

Englisheng

English

eng