Growth and social security: the role of human capital
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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- Gilles Saint-Paul, 1992. "Fiscal Policy in an Endogenous Growth Model," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1243-1259.
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CEPR Discussion Papers
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- 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.
- Galor, Oded & Tsiddon, Daniel, 1994. "Human Capital Distribution, Technological Progress, and Economic Growth," CEPR Discussion Papers 971, C.E.P.R. Discussion Papers.
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Levine's Working Paper Archive
2232, David K. Levine.
- Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
- Freeman, Scott & Polasky, Stephen, 1992. "Knowledge-based growth," Journal of Monetary Economics, Elsevier, vol. 30(1), pages 3-24, October.
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