Centre for Development Economics
Department of Economics, Delhi School of Economics


Optimal Intergenerational Transfers and The Rise and Fall of Pay-As-You-Go Pensions


Monisankar Bishnu
ISI Delhi


18th January, 2018 (Thursday) at 3:00 PM

Venue : Seminar Room (First Floor)
Department of Economics, Delhi School of Economics

All are cordially invited
We study two-armed intergenerational transfers - education and pension, in an overlapping generations economy and show that the observed rise and intended fall of pay-as-you-go pensions can be rationalized as the equilibrium choice of the society with imperfect education loan markets. Pensions support the expansion of public education system and are allowed to wither away once efficiency is achieved. This is achieved by exploiting only the market opportunities and without relying on other factors including human capital externalities, general equilibrium effects or socio-political factors highlighted in the literature. The welfare state corrects the market imperfections and eventually improves the welfare to a level strictly above that of complete markets allocation.

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