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Social Security Incentives, Human Capital Investment and Mobility of Labor

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  • Panu Poutvaara

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Abstract

Migration between countries with earnings-related and flat-rate pay-as-you-go social security systems may change human capital investments in both countries. The possibility of emigration boosts investments in human capital in the country with flat-rate benefits. Correspondingly, those expecting to migrate from the country with earnings-related benefits to a country with flat-rate benefits may reduce their investment in education. With suitably planned transfers between the two countries, allowing for migration may generate a Pareto-improvement for all current and future generations. Without transfers, either country may be unable to pay for promised benefits when labor becomes mobile.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2005/wp-cesifo-2005-09/cesifo1_wp1544.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1544.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1544

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Keywords: social security; education; migration; earnings-related and flat-rate pensions;

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References

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