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

Listed author(s):
  • Rowena A. Pecchenino
  • Patricia S. Pollard

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.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1995-001.

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Date of creation: 2000
Publication status: Published in Journal of Macroeconomics, 24 (2), June 2002, pp. 145-69
Handle: RePEc:fip:fedlwp:1995-001
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  28. repec:fth:prinin:265 is not listed on IDEAS
  29. Hubbard, R Glenn & Judd, Kenneth L, 1987. "Social Security and Individual Welfare: Precautionary Saving, Borrowing Constraints, and the Payroll Tax," American Economic Review, American Economic Association, vol. 77(4), pages 630-646, September.
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