Bequests, Gifts, and Social Security

Résumé du livre

This paper analyzes the very long run, or "stationary state," impact of an unfunded social security system. We use an overlapping generations model framework. A key feature is that while parents care about their children and can leave non-negative bequests to them, children also care about their parents and can make non-negative "gifts" to them. We show that the possibility of negative "net bequests" may make social security less harmful to private wealth accumulation than would otherwise be the case. A subsidiary finding is that risk-loving behavior may emerge for some households due to the nature of intergenerational transfers within family lines.