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.
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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
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