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Growth and Social Security: The Role of Human Capital

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Author Info
Alexander Kemnitz (University of Mannheim)
Berthold U. Wigger () (University of Mannheim and CSEF, University of Salerno)

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Abstract

This paper studies the growth and efficiency effects of pay-as-you-go financed social security when human capital is the engine of growth. Employing a variant of the Lucas (1988) model with overlapping generations, it is shown that a properly designed unfunded social security system leads to higher output growth than a fully funded one. Furthermore, the economy with unfunded social security is efficient while the other one is not. These results stand in sharp contrast to those that obtain in models where economic growth is driven by physical capital accumulation.

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Publisher Info
Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 33.

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Date of creation: 01 Jan 2000
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Publication status: Published in European Journal of Political Economy, 2000, vol. 16, pages 673-683
Handle: RePEc:sef:csefwp:33

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Related research
Keywords: Endogenous Growth; Social Security; Human Capital;

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Find related papers by JEL classification:
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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References listed on IDEAS
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.:
  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October. [Downloadable!] (restricted)
  2. Robert C. Merton, 1981. "On the Role of Social Security as a Means for Efficient Risk-Bearing in an Economy Where Human Capital Is Not Tradeable," NBER Working Papers 0743, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Sinn, Hans-Werner, 1998. "The Pay-As You-Go Pension System as a Fertility Insurance and Enforcement Device," CEPR Discussion Papers 2023, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May. [Downloadable!] (restricted)
  5. Freeman, Scott & Polasky, Stephen, 1992. "Knowledge-based growth," Journal of Monetary Economics, Elsevier, vol. 30(1), pages 3-24, October. [Downloadable!] (restricted)
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  6. Saint-Paul, Gilles, 1992. "Fiscal Policy in an Endogenous Growth Model," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1243-59, November. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Michael Kaganovich & Volker Meier, 2008. "Social Security Systems, Human Capital, and Growth in a Small Open Economy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. repec:bep:mactop:v:7:y:2007:i:1:p:1381-1381 is not listed on IDEAS
  3. Martin Debus & Jochen Michaelis, 2006. "Ausbildung, Erwerbsphase, Renteneintritt - demografischer Wandel und optimale Zeitallokation im Lebenszyklus," Discussion Papers in Economics 79/06, University of Kassel, Institute of Economics. [Downloadable!]
    Other versions:
  4. Groezen, B. van & Meijdam, L. & Verbon, H., 2002. "Social security reform and population ageing in a two-sector growth model," Discussion Paper 25, Tilburg University, Center for Economic Research. [Downloadable!]
  5. Gilles Le Garrec, 2005. "Social security, inequality and growth," Documents de Travail de l'OFCE 2005-22, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  6. Theodore Palivos, 2009. "Welfare effects of illegal immigration," Journal of Population Economics, Springer, vol. 22(1), pages 131-144, January. [Downloadable!] (restricted)
    Other versions:
  7. Berthold Wigger, 2005. "Public Debt, Human Capital Formation, and Dynamic Inefficiency," International Tax and Public Finance, Springer, vol. 12(1), pages 47-59, January. [Downloadable!] (restricted)
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