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  • © 2006

Pensionomics

On the Role of PAYGO in Pension Portfolios

Part of the book series: Lecture Notes in Economics and Mathematical Systems (LNE, volume 572)

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Table of contents (6 chapters)

  1. Front Matter

    Pages I-XII
  2. The Problem

    1. Front Matter

      Pages 1-1
    2. Methodical Foundation

      Pages 19-49
  3. The Model

    1. Front Matter

      Pages 51-51
    2. Tradable Human Capital

      Pages 53-120
    3. Replication with PAYGO

      Pages 121-169
  4. The Implications

    1. Front Matter

      Pages 171-171
  5. Back Matter

    Pages 251-318

About this book

Pensionomics puts forward a portfolio perspective on the combination of funded and unfunded pension arrangements. In a second-best type argument it is formally shown that a Pay-As-You-Go pension system can substitute the tradability of human capital: if risk-averse investors were able to directly invest into the present value of future labour income, they would allocate their pension portfolios in both human and physical capital. While this ideal form of diversification can not be implemented due to the imperfection of capital markets, one can design a typical Pay-As-You-Go system in such a way that it allows for the same intertemporal consumption allocations as the first-best solution. This replication works regardless of the demographic development.Therefore, PAYGO should play a key role in optimising the risk-return combinations for old-age savings.

Authors and Affiliations

  • Otto Beisheim School of Management, Dresdner Bank Chair of Finance, WHU, Vallendar, Germany

    Matthias F. Jäkel

Bibliographic Information

Buy it now

Buying options

eBook USD 84.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Other ways to access