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Capital-skill complementarity and the redistributive effects of Social Security Reform

  • Casarico, Alessandra
  • Devillanova, Carlo

This paper analyses the general equilibrium implications of reforming pay-as-you-go pension systems in an economy with heterogeneous agents, human capital investment and capital-skill complementarity. It shows that increasing funding, by raising savings, delivers in the long run higher physical and human capital and therefore higher output, but also higher across-group wage and income inequality. It also shows that the general equilibrium effects induced by this reform affect groups' sizes in a way that the higher across-group inequality generated by more funding goes with a larger share of the population against redistribution.

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File URL: http://www.sciencedirect.com/science/article/B6V76-4P8GWV6-3/1/3f41e7d1ed7f64f9adaaef439054d216
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 92 (2008)
Issue (Month): 3-4 (April)
Pages: 672-683

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Handle: RePEc:eee:pubeco:v:92:y:2008:i:3-4:p:672-683
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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