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Social security and growth in an agin economy: the case of actuarial fairness

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In many European countries, due to population aging, the switch from conventional unfunded public pension systems to notional systems character- ized by individual accounts is in debate. In this article, we develop an OLG model in which endogenous growth is based on an accumulation of knowledge driven by the proportion of skilled workers and the time they have spent to be trained. In such a framework, we show that conventional pension systems, contrary to notional systems, can enhance economic growth by linking bene- ?ts only to partial earnings history. Thus, considering economic growth, the optimal adjustment to aging could consist in increasing the size of existing retirement systems rather than switching to notional systems.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2012-18.

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Date of creation: May 2012
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Handle: RePEc:fce:doctra:1218

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Keywords: social security; intertemporal choice; human capital;

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