This paper studies how prefunding public pensions can improve policy outcomes when short-sighted governments cannot commit. We focus on sustainable plans, where optimal nonlinear pensions are not reneged on by sequential governments. Prefunding pensions is a commitment mechanism. It implies...

We characterize an optimal redistributive pension scheme when individuals face temptation, but can exert costly self-control (as in Gul & Pesendorfer, 2001; 2004). Our results challenge the common wisdom that forced savings tend to reduce individuals' mental cost of self-control. In our model,...

We examine how the introduction of self-control preferences influences the trade-off between two fundamental components of a public pension system: the contribution rate and its degree of redistribution. The pension regime affects individuals' welfare by altering how yielding to temptation (i.e....

We examine how the introduction of self-control preferences influence the trade-off between two fundamental components of a public pension system: the contribution rate and its degree of redistribution. The pension regime affects individuals’ welfare by altering how yielding to temptation...

We characterize an optimal redistributive pension scheme when individuals face temptation, but can exert costly self-control (as in Gul & Pesendorfer, 2001; 2004). Our results challenge the common wisdom that forced savings tend to reduce individuals' mental cost of self-control. In our model,...

We examine how the introduction of self-control preferences influences the trade-off between two fundamental components of a public pension system: the contribution rate and its degree of redistribution. The pension regime affects individuals' welfare by altering how yielding to temptation (i.e....

We examine how the introduction of self-control preferences influences the trade-off between two fundamental components of a public pension system: the contribution rate and its degree of redistribution. The pension regime affects individuals' welfare by altering how yielding to temptation (i.e....

We study the features of optimal transfers to the non-employed which include those unable to work, the voluntarily unemployed, and the involuntarily unemployed. Both voluntary and involuntary unemployment are endogenous. We analyze optimal government policies in the presence of two types of...