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Dependent children and aged parents: funding education and social security in an aging economy

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  • Rowena A. Pecchenino
  • Patricia S. Pollard

Abstract

In the last few decades in the United States birth rates have declined and longevity has risen while productivity growth has slowed. Given such changes, the increasing burden of funding programs for the elderly is likely to shift resources away from the young and toward the elderly. This paper uses an overlapping generations framework to examine the effects of tax policies on an aging economy. We find that if the quality of the education system is sufficiently high then shifting tax resources away from social security and toward education is both growth and welfare enhancing.

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Bibliographic Info

Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1995-001.

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Date of creation: 2000
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Publication status: Published in Journal of Macroeconomics, 24 (2), June 2002, pp. 145-69
Handle: RePEc:fip:fedlwp:1995-001

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Keywords: Education ; Social security;

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References

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  1. Wildasin, David E, 1991. "The Marginal Cost of Public Funds with an Aging Population," Journal of Population Economics, Springer, vol. 4(2), pages 111-35, May.
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Citations

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Cited by:
  1. Megumi Mochida, 2005. "The Effect of Education Subsidies in an Aging Economy," Discussion Papers in Economics and Business 05-30, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  2. Tabata, Ken, 2005. "Population aging, the costs of health care for the elderly and growth," Journal of Macroeconomics, Elsevier, vol. 27(3), pages 472-493, September.
  3. Yew, Siew Ling & Zhang, Jie, 2013. "Socially optimal social security and education subsidization in a dynastic model with human capital externalities, fertility and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 154-175.
  4. Fanti, Luciano & Gori, Luca, 2011. "Child policy ineffectiveness in an overlapping generations small open economy with human capital accumulation and public education," Economic Modelling, Elsevier, vol. 28(1), pages 404-409.
  5. Rowena A. Pecchenino & Patricia S. Pollard, 2003. "Aging, myopia and the pay-as-you-go public pension systems of the G7: a bright future?," Working Papers 2000-015, Federal Reserve Bank of St. Louis.
  6. Amedeo Piolatto, 2011. "Financing public education: a political economy model with altruistic agents and retirement concerns," Working Papers. Serie AD 2011-12, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  7. Yang, Zaigui, 2008. "Lifetime Uncertainty and the Optimal Replacement Rate of urban Public Pension in China," MPRA Paper 18794, University Library of Munich, Germany.
  8. Chen, Hung-Ju & Fang, I-Hsiang, 2011. "Migration, Social Security, and Economic Growth," MPRA Paper 30251, University Library of Munich, Germany.
  9. Zamac , Jovan, 2005. "Winners and Losers from a Demographic Shock under Different Intergenerational Transfer Schemes," Working Paper Series 2005:13, Uppsala University, Department of Economics.
  10. Shin, Inyong, 2012. "The Effect of Pension on the Optimized Life Expectancy and Lifetime Utility Level," MPRA Paper 41374, University Library of Munich, Germany.
  11. Fanti, Luciano & Gori, Luca, 2010. "Increasing PAYG pension benefits and reducing contribution rates," Economics Letters, Elsevier, vol. 107(2), pages 81-84, May.
  12. Tetsuo Ono, 2007. "Unemployment dynamics in an OLG economy with public pensions," Economic Theory, Springer, vol. 33(3), pages 549-577, December.
  13. Yang, Zaigui, 2009. "Urban public pension, replacement rates and population growth rate in China," Insurance: Mathematics and Economics, Elsevier, vol. 45(2), pages 230-235, October.
  14. Zamac, Jovan, 2007. "Pension design when fertility fluctuates: The role of education and capital mobility," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 619-639, April.
  15. Yang Zaigui, 2008. "Population Growth Rate, Life Expectancy and Pension Program Improvement in China," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 2(2), pages 1-13, March.
  16. repec:ebl:ecbull:v:10:y:2008:i:2:p:1-8 is not listed on IDEAS
  17. Fanti, Luciano & Gori, Luca, 2010. "Economic growth and stability with public PAYG pensions and private intra-family old-age insurance," MPRA Paper 20727, University Library of Munich, Germany.

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