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Human capital accumulation, labor supply of the elderly and government policy

Author

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  • Mingzhu Li

    (School of Urban Governance and Public Affairs, Suzhou City University)

Abstract

This study examines the effect of the PAYG tax rate from short- and long-run perspectives using an overlapping-generations model with pay-as-you-go (PAYG) social security and retirement decision-making by the government. The findings are as follows: First, when the government is myopic, a tax rate exists that maximizes the utility of the present generation or some other generation in transition. In this case, the reason for introducing a PAYG pension is acknowledged. Second, when the government is concerned only with the economic growth rate in the long run, the tax rate has a negative effect on the economic growth rate, which means that PAYG social security should not be introduced. Third, the long-term economic growth rate can increase if retirement is prolonged.

Suggested Citation

  • Mingzhu Li, 2025. "Human capital accumulation, labor supply of the elderly and government policy," Economics Bulletin, AccessEcon, vol. 45(2), pages 741-747.
    • Handle: RePEc:ebl:ecbull:eb-23-00221
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    Keywords

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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • I2 - Health, Education, and Welfare - - Education

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