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Dependent children and aged parents: funding education and social security in an aging economy

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  • Rowena A. Pecchenino
  • Patricia S. Pollard

Abstract

In the last few decades in the United States birth rates have declined and longevity has risen while productivity growth has slowed. Given such changes, the increasing burden of funding programs for the elderly is likely to shift resources away from the young and toward the elderly. This paper uses an overlapping generations framework to examine the effects of tax policies on an aging economy. We find that if the quality of the education system is sufficiently high then shifting tax resources away from social security and toward education is both growth and welfare enhancing.

Suggested Citation

  • Rowena A. Pecchenino & Patricia S. Pollard, 2000. "Dependent children and aged parents: funding education and social security in an aging economy," Working Papers 1995-001, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:1995-001
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    Cited by:

    1. Zamac , Jovan, 2005. "Winners and Losers from a Demographic Shock under Different Intergenerational Transfer Schemes," Working Paper Series 2005:13, Uppsala University, Department of Economics.
    2. Megumi Mochida, 2005. "The Effect of Education Subsidies in an Aging Economy," Discussion Papers in Economics and Business 05-30, Osaka University, Graduate School of Economics.
    3. Kaganovich, Michael & Zilcha, Itzhak, 1999. "Education, social security, and growth," Journal of Public Economics, Elsevier, vol. 71(2), pages 289-309, February.
    4. Luciano Fanti & Luca Gori, 2010. "Public Education, Fertility Incentives, Neoclassical Economic Growth And Welfare," Bulletin of Economic Research, Wiley Blackwell, vol. 62(1), pages 59-77, January.
    5. Chetan Ghate & Gerhard Glomm & John T. Stone, 2014. "Public and private expenditures on human capital: Accumulation in India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 14-04, Indian Statistical Institute, New Delhi, India.
    6. repec:ebl:ecbull:v:10:y:2008:i:2:p:1-8 is not listed on IDEAS
    7. Daniel Montolio & Amedeo Piolatto, 2011. "Financing public education when altruistic agents have retirement concerns," Working Papers 2011/30, Institut d'Economia de Barcelona (IEB).
    8. Yang, Zaigui, 2009. "Urban public pension, replacement rates and population growth rate in China," Insurance: Mathematics and Economics, Elsevier, vol. 45(2), pages 230-235, October.
    9. Shin, Inyong, 2012. "The Effect of Pension on the Optimized Life Expectancy and Lifetime Utility Level," MPRA Paper 41374, University Library of Munich, Germany.
    10. Daniel Montolio (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)) & Amedeo Piolatto (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)), 2011. "Financing public education when altruistic agents have retirement concerns," Working Papers in Economics 268, Universitat de Barcelona. Espai de Recerca en Economia.
    11. Fanti, Luciano & Gori, Luca, 2011. "Child policy ineffectiveness in an overlapping generations small open economy with human capital accumulation and public education," Economic Modelling, Elsevier, vol. 28(1), pages 404-409.
    12. Yang Zaigui, 2008. "Population Growth Rate, Life Expectancy and Pension Program Improvement in China," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 2(2), pages 1-13, March.
    13. Chen, Hung-Ju & Fang, I-Hsiang, 2013. "Migration, social security, and economic growth," Economic Modelling, Elsevier, vol. 32(C), pages 386-399.
    14. Inyong Shin, 2018. "Could pension system make us happier?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1452342-145, January.
    15. Rowena A. Pecchenino & Patricia S. Pollard, 2005. "Aging, Myopia, and the Pay‐As‐You‐Go Public Pension Systems of the G7: A Bright Future?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(3), pages 449-470, August.
    16. Tetsuo Ono, 2007. "Unemployment dynamics in an OLG economy with public pensions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(3), pages 549-577, December.
    17. Fanti, Luciano & Gori, Luca, 2010. "Economic growth and stability with public PAYG pensions and private intra-family old-age insurance," MPRA Paper 20727, University Library of Munich, Germany.
    18. Chetan Ghate & Gerhard Glomm & John T. Stone, 2014. "Public and private expenditures on human capital: Accumulation in India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 14-04, Indian Statistical Institute, New Delhi, India.
    19. Zaigui Yang, 2016. "Population Aging And Public Pension: The Case Of Beijing Analyzed By An Olg Model," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-14, September.
    20. Fanti, Luciano & Gori, Luca, 2010. "Increasing PAYG pension benefits and reducing contribution rates," Economics Letters, Elsevier, vol. 107(2), pages 81-84, May.
    21. Tabata, Ken, 2005. "Population aging, the costs of health care for the elderly and growth," Journal of Macroeconomics, Elsevier, vol. 27(3), pages 472-493, September.
    22. Yew, Siew Ling & Zhang, Jie, 2013. "Socially optimal social security and education subsidization in a dynastic model with human capital externalities, fertility and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 154-175.
    23. Zamac, Jovan, 2007. "Pension design when fertility fluctuates: The role of education and capital mobility," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 619-639, April.
    24. Yang, Zaigui, 2008. "Lifetime Uncertainty and the Optimal Replacement Rate of urban Public Pension in China," MPRA Paper 18794, University Library of Munich, Germany.

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