Social Security Incentives and Human Capital Investment
AbstractWhile the effect of social security systems on retirement decisions has received much attention, the impact of these systems on individuals’ incentives to invest in their human capital has not been analyzed. We integrate human capital investment and retirement decisions in a simple analytical life-cycle model with full certainty and investigate how different social security schemes may a¤ect welfare, human capital investment and labor supply. We analyze and compare three different social security systems. Our results suggest that actuarial adjustment and the link between individual social security contributions and benefits increase human capital investment and postpone retirement.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 438.
Date of creation: 2001
Date of revision:
Social security; retirement; education; human capital; labor supply;
Other versions of this item:
- Morten I. Lau & Panu Poutvaara, 2006. "Social Security Incentives and Human Capital Investment," Finnish Economic Papers, Finnish Economic Association, vol. 19(1), pages 16-24, Spring.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Svend E. Hougaard Jensen & Morten I. Lau & Panu Poutvaara, 2004. "Efficiency and Equity Aspects of Alternative Social Security Rules," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 325-, September.
- Thomas F. Cooley & Jorge Soares, 1999. "A Positive Theory of Social Security Based on Reputation," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 135-160, February.
- Nielsen, Soren Bo & Sorensen, Peter Birch, 1997. "On the optimality of the Nordic system of dual income taxation," Journal of Public Economics, Elsevier, vol. 63(3), pages 311-329, February.
- Cremer, Helmuth & Pestieau, Pierre, 2003.
"The Double Dividend of Postponing Retirement,"
International Tax and Public Finance,
Springer, vol. 10(4), pages 419-34, August.
- Cremer, Helmuth & Pestieau, Pierre, 2002. "The Double Dividend of Postponing Retirement," IDEI Working Papers 144, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003.
- CREMER, Helmuth & PESTIEAU, Pierre, . "The double dividend of postponing retirement," CORE Discussion Papers RP -1696, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Diamond, Peter A & Mirrlees, James A, 1986. " Payroll-Tax Financed Social Insurance with Variable Retirement," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 25-50.
- Panu Poutvaara, 2000. "Education, Mobility of Labour and Tax Competition," International Tax and Public Finance, Springer, vol. 7(6), pages 699-719, December.
- Browning, Edgar K, 1975. "Why the Social Insurance Budget Is Too Large in a Democracy," Economic Inquiry, Western Economic Association International, vol. 13(3), pages 373-88, September.
- Boskin, Michael J, 1977. "Social Security and Retirement Decisions," Economic Inquiry, Western Economic Association International, vol. 15(1), pages 1-25, January.
- Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S11-44, August.
- Sinn, Hans-Werner, 1997. "The selection principle and market failure in systems competition," Journal of Public Economics, Elsevier, vol. 66(2), pages 247-274, November.
- Ludwig, Alexander & Schelkle, Thomas & Vogel, Edgar, 2010.
"Demographic Change, Human Capital and Welfare,"
MEA discussion paper series
10196, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Nikos Benos, 2005. "Fiscal Policy and Economic Growth: Empirical Evidence from OECD," University of Cyprus Working Papers in Economics 1-2005, University of Cyprus Department of Economics.
- Walter H. Fisher & Christian Keuschnigg, 2007.
"Pension Reform and Labor Market Incentives,"
University of St. Gallen Department of Economics working paper series 2007
2007-13, Department of Economics, University of St. Gallen.
- Panu Poutvaara, 2005.
"Social Security Incentives, Human Capital Investment and Mobility of Labor,"
CESifo Working Paper Series
1544, CESifo Group Munich.
- Poutvaara, Panu, 2007. "Social security incentives, human capital investment and mobility of labor," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1299-1325, August.
- Poutvaara, Panu, 2005. "Social Security Incentives, Human Capital Investment and Mobility of Labor," IZA Discussion Papers 1729, Institute for the Study of Labor (IZA).
- Michael Gorski & Tim Krieger & Thomas Lange, 2007. "Pensions, Education and Life Expectancy," Working Papers 4, University of Paderborn, CIE Center for International Economics.
- repec:dgr:umaror:2009015 is not listed on IDEAS
- Benos, Nikos, 2009. "Fiscal policy and economic growth: empirical evidence from EU countries," MPRA Paper 19174, University Library of Munich, Germany.
- Alexander Ludwig & Thomas Schelkle & Edgar Vogel, 2011.
"Online Appendix to "Demographic Change, Human Capital and Welfare","
08-168, Review of Economic Dynamics.
- Tim Krieger & Thomas Lange, 2012. "Education, Life Expectancy and Pension Reform," Hacienda Pública Española, IEF, vol. 202(3), pages 31-55, September.
- Vogel, Edgar & Ludwig, Alexander & Börsch-Supan, Axel, 2011. "Aging and Pension Reform in a Two-Region World: The Role of Human Capital," MEA discussion paper series 11246, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.