IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Employers' Versus Employees' Contributions To The Social Security System

Listed author(s):
  • G. Corneo
  • M. Marquardt

We develop an overlapping--generations model that highlights the interaction between an unfunded pension system and an unemployment insurance in the presence of a labor market with union wage setting. The social security system is financed by proportional wage taxes levied on firms and their employees. The equilibrium path entails endogenous growth and involuntary unemployment. The contribution rates to the social security system are shown to have no influence on the equilibrium rate of unemployment. The contribution rates exert growth effects, which are negative for the contributions to the pension system and positive for those to the unemployment insurance. We investigate whether workers or firms should finance the social security system. While there is no financing method that dominates another one on efficiency grounds, the financing methods can be ranked with respect to their growth effects. Maximizing economic growth requires that only firms finance the unemployment insurance and only workers finance the pension system. These results are due to the interaction between the pension system and the unemployment insurance, and would not arise if only one of these institutions were present.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 570.

in new window

Date of creation: Jan 1998
Handle: RePEc:bon:bonsfa:570
Contact details of provider: Postal:
Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany

Fax: +49 228 73 6884
Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bon:bonsfa:570. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (BGSE Office)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.