Social Security Regime, Growth and Income Distribution
This paper studies the role of social security on income distribution, capital accumulation and growth in a general equilibrium setup. An Overlapping Generations Model with heterogeneous agents is used. Heterogeneity is introduced by means of different abilities among individuals and non negative bequest motives. A key feature of the model is the explicit introduction of a government and its fiscal policy. The model is then used to investigate the empirical implications of different social security regimes and redistributional policies undertaken by the government on income distribution, growth, and capital accumulation. The theoretical model is calibrated in order to match some key stylized facts of Brazil and USA. The paper shows that under certain redistributional policies undertaken by the government, a pay-as-you-go system leads to more income inequality and a worse economic perfomance than a fully funded system. Another important implication of the paper is that the contradictory evidence regarding the Kuznets curve found in the empirical literature can be explained by the simultaneous relation between income distribution and level of income (one is not exogenous to the other). The relationship builds upon complex interactions between fiscal policy and the distribution of abilities of the population. Thus, the paper concludes that the Kuznets curve can have any arbitrary shape at a theoretical level, and the inverted U shape is only compatible with a particular realization of fiscal policies.
|Date of creation:||Oct 1997|
|Contact details of provider:|| Postal: Casilla No967, Santiago|
Phone: (562) 670 2000
Fax: (562) 698 4847
Web page: http://www.bcentral.cl/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:chb:bcchwp:19. 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: (Claudio Sepulveda)
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.