TY  - RPRT
        AU  - Tyrowicz, Joanna
AU  - Makarski, Krzysztof
AU  - Bielecki, Marcin
        TI  - Inequality in an OLG Economy with Heterogeneous Cohorts and Pension Systems
        PY  - 2018/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 11621
        UR  - https://www.iza.org/publications/dp11621
        AB  - We analyze the consumption and wealth inequality in an OLG model with mandatory pension systems. Our framework features within cohort heterogeneity of endowments and heterogeneity of preferences. We allow for population aging and gradual decline in TFP growth. We show four main results. First, increasing longevity translates to substantial increases in aggregate consumption inequality and wealth inequality. Second, a pension system reform from a defined benefit to a defined contribution works to reinforce consumption inequality and reduce wealth inequality. Third, minimum pension benefits are able to partially counteract an increase in inequality introduced by the defined contribution system, at a fiscal cost. Fourth the minimum pension benefit guarantee mostly addresses the sources of inequality which stem from differentiated endowments rather than those which stem from heterogeneous preferences.
        KW  - defined contribution
KW  - longevity
KW  - inequality
KW  - wealth
KW  - consumption
KW  - defined benefit
        ER  -