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Capital-skill Complementarity and the Redistributive Effects of Social Security Reform

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  • Alessandra Casarico
  • Carlo Devillanova

Abstract

This paper analyses the general equilibrium implications of reforming pay-as-you-go pension systems in an economy with heterogeneous agents, human capital investment and capital-skill complementarity. It shows that increasing funding delivers in the long run higher physical and human capital and therefore higher output, but also higher wage and income inequality. The latter affects preferences over the degree of redistribution of e remaining pay-as-you-go component: despite the greater role that edistribution could perform in the new steady state, we find a preference for lower redistribution for a larger group of the population.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2003/wp-cesifo-2003-09/cesifo1_wp1038.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1038.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1038

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Keywords: capital-skill complementarity; inter and intragenerational redistribution; pay-as-you-go; fully funded;

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References

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  1. CASAMATTA, Georges & CREMER , Helmuth & PESTIEAU, Pierre, . "The political economy of social security," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1475, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  3. Martin Feldstein, 2005. "Rethinking Social Insurance," NBER Working Papers 11250, National Bureau of Economic Research, Inc.
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  7. Hugett, M. & Ventura, G., 1997. "On the Distributional Effects of Social Security Reform," UWO Department of Economics Working Papers, University of Western Ontario, Department of Economics 9710, University of Western Ontario, Department of Economics.
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  13. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 2002. "Distributional Effects in a General Equilibrium Analysis of Social Security," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 327-370 National Bureau of Economic Research, Inc.
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  24. Jonathan Gruber & David A. Wise, 2002. "Different Approaches to Pension Reform from an Economic Point of View," NBER Chapters, in: Social Security Pension Reform in Europe, pages 49-84 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Kuhle, Wolfgang, 2012. "Dynamic efficiency and the two-part golden rule with heterogeneous agents," Journal of Macroeconomics, Elsevier, Elsevier, vol. 34(4), pages 992-1006.
  2. repec:hal:wpaper:halshs-00285040 is not listed on IDEAS
  3. Christophe Hachon, 2008. "Redistribution, Pension Systems and Capital Accumulation," Financial Theory and Practice, Institute of Public Finance, Institute of Public Finance, vol. 32(3), pages 339-368.
  4. Fernando, Estrada & Jorge Ivan, Gonzalez & Alberto, Castrillon & Mauricio, Perez, 2010. "Problemas fiscales y redistributivos en Colombia
    [Redistributive fiscal problems in Colombia]
    ," MPRA Paper 20518, University Library of Munich, Germany.
  5. repec:hal:wpaper:halshs-00279167 is not listed on IDEAS
  6. Estrada, Fernando, 2012. "Estado y política pública en Colombia
    [State and Public Policy in Colombia]
    ," MPRA Paper 42380, University Library of Munich, Germany.
  7. Christophe Hachon, 2010. "Éducation et progressivité des systèmes de retraite. Quand les inégalités face à la mort comptent," Revue économique, Presses de Sciences-Po, Presses de Sciences-Po, vol. 0(4), pages 751-769.
  8. Fernando, Estrada, 2013. "Estado y política pública en Colombia: Un balance desde la teoría política
    [State and public policy in Colombia]
    ," MPRA Paper 45223, University Library of Munich, Germany.
  9. Wolfgang Kuhle, 2012. "The Dynamics of Utility in the Neoclassical OLG Model," Working Paper Series of the Max Planck Institute for Research on Collective Goods, Max Planck Institute for Research on Collective Goods 2012_22, Max Planck Institute for Research on Collective Goods.
  10. Estrada, Fernando, 2010. "Devouring the Leviathan: fiscal policy and public expenditure in Colombia," MPRA Paper 21981, University Library of Munich, Germany.

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