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A Rights-egalitarian Pay-as-you-go Pension System
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 124 (2004), Iss. 3 : pp. 355–369
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Weikard, Hans-Peter
Abstract
This paper addresses the problem of intergenerational and intragenerational distribution in a pay-as-you-go pension system. While each generation pays the pensions of the preceding generation, they also bear the burden of raising the next. The burden of child care is unevenly distributed within a generation. Demographie change affects the distribution across generations. To resolve both distributional issues this paper proposes to apply the rights-egalitarian sharing rule. Under this rule individual claims are fully respected; all gains or losses are divided equally. lt can be shown that a rights-egalitarian pension system implements füll compensation for human capital investments in a long-run equilibrium.