Social security systems in most industrialized countries face severe financial problems due to adverse demographic changes. The increase in old-age dependency, however, will be spread over a period of approximately 50 years. The degree of technological progress necessary to offset the negative effects of aging might therefore be small. Using models with endogenous labor supply and with capital accumulation, we demonstrate that under plausible assumptions, current living standards can be maintained with a moderate rate of technological progress. The necessary rate of growth increases both in the size of the program and in the fraction of agents who exclusively depend on public pensions in retirement.
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number
37.
Find related papers by JEL classification: H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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