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Capital-skill Complementarity and the Redistributive Effects of Social Security Reform

  • Alessandra Casarico
  • Carlo Devillanova

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 delivers in the long run higher physical and human capital and therefore higher output, but also higher wage and income inequality. The latter affects preferences over the degree of redistribution of e remaining pay-as-you-go component: despite the greater role that edistribution could perform in the new steady state, we find a preference for lower redistribution for a larger group of the population.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2003/wp-cesifo-2003-09/cesifo1_wp1038.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1038.

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Date of creation: 2003
Date of revision:
Handle: RePEc:ces:ceswps:_1038
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  1. Martin Feldstein, 2005. "Rethinking Social Insurance," NBER Working Papers 11250, National Bureau of Economic Research, Inc.
  2. John Y. Campbell & Martin Feldstein, 2001. "Risk Aspects of Investment-Based Social Security Reform," NBER Books, National Bureau of Economic Research, Inc, number camp01-1, October.
  3. Thomas Cooley & Jorge Soares, 1999. "Privatizing Social Security," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 731-755, July.
  4. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  5. Martin S. Feldstein & Jeffrey B. Liebman, 2002. "The Distributional Effects of an Investment-Based Social Security System," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 263-326 National Bureau of Economic Research, Inc.
  6. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2000. "The Political Economy of Social Security," CESifo Working Paper Series 259, CESifo Group Munich.
  7. Juan C. Conesa & Dirk Krueger, 1999. "Social Security Reform with Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 757-795, October.
  8. Peter Diamond, 1998. "The Economics of Social Security Reform," NBER Working Papers 6719, National Bureau of Economic Research, Inc.
  9. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 640-647.
  10. Theo Leers & Lex Meijdam & Harrie A. A Verbon, 2001. "The Politics of Pension Reform under Ageing," CESifo Working Paper Series 521, CESifo Group Munich.
  11. Martin Feldstein & Jeffrey B. Liebman, 2001. "Social Security," NBER Working Papers 8451, National Bureau of Economic Research, Inc.
    • Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
  12. Steven A. Sass & Robert K. Triest, 1997. "Social Security reform: links to saving, investment and growth," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 41(Jun).
  13. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 2002. "Distributional Effects in a General Equilibrium Analysis of Social Security," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 327-370 National Bureau of Economic Research, Inc.
  14. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August.
  15. Karnit Flug & Zvi Hercowitz, 2000. "Equipment Investment and the Relative Demand for Skilled Labor: International Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(3), pages 461-485, July.
  16. Jonathan Gruber & David A. Wise, 2002. "Different Approaches to Pension Reform from an Economic Point of View," NBER Chapters, in: Social Security Pension Reform in Europe, pages 49-84 National Bureau of Economic Research, Inc.
  17. Mark Huggett & Gustavo Ventura, 1998. "On the Distributional Effects of Social Security Reform," Working Papers 9801, Centro de Investigacion Economica, ITAM.
  18. Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
  19. Sinn, Hans-Werner & Uebelmesser, Silke, 2003. "Pensions and the path to gerontocracy in Germany," European Journal of Political Economy, Elsevier, vol. 19(1), pages 153-158, March.
  20. Coronado Julia Lynn, 2002. "The Effects of Social Security Privatization on Household Saving: Evidence from Chile," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-24, August.
  21. Diamond, Peter A., 2002. "Social Security Reform," OUP Catalogue, Oxford University Press, number 9780199247899, March.
  22. Eswar Prasad, 1994. "The Canadian Labor Market: Developments, Prospects, and Policy," IMF Working Papers 94/97, International Monetary Fund.
  23. Casarico, Alessandra, 1998. "Pension Reform and Economic Performance under Imperfect Capital Markets," Economic Journal, Royal Economic Society, vol. 108(447), pages 344-62, March.
  24. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
  25. repec:ner:tilbur:urn:nbn:nl:ui:12-87487 is not listed on IDEAS
  26. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  27. repec:cup:cbooks:9780521806428 is not listed on IDEAS
  28. repec:cup:cbooks:9780521001151 is not listed on IDEAS
  29. Stokey, Nancy L, 1996. " Free Trade, Factor Returns, and Factor Accumulation," Journal of Economic Growth, Springer, vol. 1(4), pages 421-47, December.
  30. repec:cup:cbooks:9780521022248 is not listed on IDEAS
  31. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November.
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