Private versus public risk sharing: Should governments provide reinsurance

  • Henning Bohn Henning Bohn

The paper examines alternative arrangements for intergenerational risk sharing in a small open economy subject to macroeconomic disturbances. Under certain conditions, private pension funds can provide substantial risk sharing across generations. Private risksharing alleviates the burden on governments to provide insurance, but it is limited by mobility in the labor market and by the ability of corporate plan sponsors to default.Government has a role in correcting these limitations by providing reinsurance and it can enter insurance arrangements on behalf of future generations. Optimal reinsurance includes bonds indexed to longevity and to productivity.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

MORE ABOUT NETSPAR


Mission en strategy           •           Network           •           Organisation           •          Magazine
Board Brief            •            Actionplan 2019-2023           •           Researchagenda

ABOUT NETSPAR

Our partners

vu
NN_logo_gray
B20190901_nidi-logo_greyscale
B20160708_apg
B20160708_ministeries
View all partners