Document Type

Working Paper

Date of This Version

7-1-2019

Keywords

welfare, pay-as-you-go system, international portfolio choice, OLG model

JEL Classification

D52, F21, F41, G11, H55

Abstract

We employ a two-country overlapping-generations model to explore the international dimension of household portfolio choices induced by the asymmetric provision of government-run pensions. We study the resulting patterns of risk-sharing and the corresponding welfare effects on both home and foreign agents. Introducing the defined benefits pay-as-you-go system at home increases the welfare of all other agents at the expense of the home workers and improves the degree of intergenerational risk sharing abroad. Conversely, a defined contributions system leads to welfare losses of both home cohorts accompanied by gains abroad, but does increase the extent of intergenerational risk sharing at home.

Working Paper Number

1903

Share

COinS