A primer on social security systems and reforms

Craig P. Aubuchon, Juan C. Conesa, Carlos Garriga

Research output: Contribution to journalReview articleResearchpeer-review

1 Citation (Scopus)


This article reviews the characteristics of different social security systems. Many configurations arise depending on the nature of a system's funding and determination of benefits. Many reforms propose changing the social security systems. The authors focus their analysis of the transition from a pay-as-you-go to a fully funded system. They argue that the key component of any reform is the treatment of the implicit liabilities of a country's social security system. The welfare gains accruing to some cohorts as a result of such reforms usually stem from either a partial or complete default on the implicit debt of the system, and in that sense the gains imply only a redistribution of welfare across agents. In contrast, the elimination of existing distortions in social security financing can generate efficiency gains, allowing for welfare improvements for all agents. This result shifts the focus from the nature of the system itself and centers the debate on the distortions associated with social security. © 2011, The Federal Reserve Bank of St. Louis.
Original languageEnglish
Pages (from-to)19-35
JournalFederal Reserve Bank of St. Louis Review
Issue number1
Publication statusPublished - 1 Jan 2011


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