A Comparative Welfare Analysis of Social Security System Selection

Abstract

The design of a comprehensive social security system is a critical issue to many countries and regions. This paper presents a comparative economic welfare analysis on typical social security systems from the viewpoints of “all-generation welfare” and “each-generation welfare,” respectively. The analysis shows that the fact that one social security system is better or worse than another is not absolute and that it depends on some specific parameter conditions. In the paper, we provide these parameter conditions and also show a “paradox of social security system design” based on the analysis. At the end of the paper, two further research-worthy questions are raised.