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Payg Pensions And Human Capital Accumulation: Some Unpleasant Arithmetic

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  • GIAM PIETRO CIPRIANI
  • MILTIADIS MAKRIS

Abstract

A large literature has studied the effects of PAYG systems on fertility, human capital and growth. We argue that the social security system may also interact with longevity when the latter is endogenously determined. We show that in such an environment, in a dynamically efficient economy PAYG pensions must be sufficiently low in order to ensure positive economic growth. Moreover, a transition to a funded social security system will promote growth, and can thereby take place by fully compensating the losers.

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Bibliographic Info

Article provided by University of Manchester in its journal The Manchester School.

Volume (Year): 80 (2012)
Issue (Month): 4 (07)
Pages: 429-446

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Handle: RePEc:bla:manchs:v:80:y:2012:i:4:p:429-446

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References

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  1. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
  2. Davies, James B. & Kuhn, Peter, 1992. "Social security, longevity, and moral hazard," Journal of Public Economics, Elsevier, vol. 49(1), pages 91-106, October.
  3. Robert Tamura, 2004. "Human capital and economic development," Working Paper 2004-34, Federal Reserve Bank of Atlanta.
  4. Poutvaara, Panu, 2005. "Social Security Incentives, Human Capital Investment and Mobility of Labor," IZA Discussion Papers 1729, Institute for the Study of Labor (IZA).
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  6. Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2004. "Pensions with Endogenous and Stochastic Fertility," IDEI Working Papers 305, Institut d'Économie Industrielle (IDEI), Toulouse.
  7. Christopher H. Wheeler, 2007. "Human capital externalities and adult mortality in the U.S," Working Papers 2007-045, Federal Reserve Bank of St. Louis.
  8. Andrew Abel & Gregory N. Mankiw & Lawrence H. Summers & Richard Zeckhauser, . "Assessing Dynamic Efficiency: Theory and Evidence," Rodney L. White Center for Financial Research Working Papers 14-88, Wharton School Rodney L. White Center for Financial Research.
  9. Pascal Belan & Philippe Michel & Pierre Pestieau, 1998. "Pareto-Improving Social Security Reform," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 23(2), pages 119-125, December.
  10. Rosati, Furio Camillo, 1996. "Social security in a non-altruistic model with uncertainty and endogenous fertility," Journal of Public Economics, Elsevier, vol. 60(2), pages 283-294, May.
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  12. Nishimura, Kazuo & Zhang, Junsen, 1992. "Pay-as-you-go public pensions with endogenous fertility," Journal of Public Economics, Elsevier, vol. 48(2), pages 239-258, July.
  13. Giam Pietro Cipriani & Miltiadis Makris, 2004. "Indeterminacy, intergenerational redistribution, endogenous longevity and human capital accumulation," Discussion Papers 0401, Exeter University, Department of Economics.
  14. Cigno, Alessandro, 1992. "Children and Pensions," Journal of Population Economics, Springer, vol. 5(3), pages 175-83, August.
  15. PESTIEAU, Pierre & PONTHIÈRE, Grégory & SATO, Motohiro, 2006. "Longevity and Pay-as-you-Go pensions," CORE Discussion Papers 2006054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  16. Tomas J. Philipson & Gary S. Becker, 1998. "Old-Age Longevity and Mortality-Contingent Claims," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 551-573, June.
  17. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Munich Reprints in Economics 938, University of Munich, Department of Economics.
  18. Berthold U. Wigger, 1999. "Pay-as-you-go financed public pensions in a model of endogenous growth and fertility," Journal of Population Economics, Springer, vol. 12(4), pages 625-640.
  19. Alders, Peter & Broer, D. Peter, 2005. "Ageing, fertility, and growth," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1075-1095, June.
  20. Docquier, Frédéric & Paddison, Oliver & Pestieau, Pierre, 2006. "Optimal Accumulation in an Endogenous Growth Setting with Human Capital," IZA Discussion Papers 2081, Institute for the Study of Labor (IZA).
  21. Matteo Cervellati & Uwe Sunde, 2005. "Human Capital Formation, Life Expectancy, and the Process of Development," American Economic Review, American Economic Association, vol. 95(5), pages 1653-1672, December.
  22. Andersen, Torben M., 2008. "Increasing longevity and social security reforms--A legislative procedure approach," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 633-646, April.
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Cited by:
  1. Cipriani, Giam Pietro, 2013. "Population Ageing and PAYG Pensions in the OLG Model," IZA Discussion Papers 7144, Institute for the Study of Labor (IZA).

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