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Unemployment, Public Pensions, and Capital Accumulation: Assessing Growth Effects of Alternative Funding Strategies

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  • Joachim Thøgersen

Abstract

The paper develops an overlapping-generations model that interacts with a labor market characterized by equilibrium unemployment. This structure implies that young individuals can be in two different states, employed or unemployed. Hence, the social security system contains both old-age benefits and unemployment insurance. Including these features, the model seeks to assess growth effects of three different pension systems: one unfunded and two funded, where the distinction is made between actuarial and nonactuarial funding strategies. It is shown that both funded systems generate higher growth than an unfunded system. Moreover, the actuarial system fosters higher growth than the nonactuarial.

Suggested Citation

  • Joachim Thøgersen, 2010. "Unemployment, Public Pensions, and Capital Accumulation: Assessing Growth Effects of Alternative Funding Strategies," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(3), pages 502-520, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201009)166:3_502:uppaca_2.0.tx_2-e
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    References listed on IDEAS

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    Cited by:

    1. Kunze, Lars, 2012. "Funded social security and economic growth," Economics Letters, Elsevier, vol. 115(2), pages 180-183.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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