IDEAS home Printed from https://ideas.repec.org/p/hhs/uunewp/2005_013.html
   My bibliography  Save this paper

Winners and Losers from a Demographic Shock under Different Intergenerational Transfer Schemes

Author

Listed:
  • Zamac , Jovan

    (Department of Economics)

Abstract

This study investigates the general equilibrium effects of a fertility shock under different intergenerational transfer schemes. The effects on lifetime income and utility for different generations, as well as the effects on factor prices, are analyzed in a three-period overlapping generations model where the workers provide for the young and the retired under different tax schemes. The economic effects of a fertility shock vary substantially with different intergenerational transfer schemes. How wages, interest rate and savings will evolve differs not only quantitatively but also qualitatively. To minimize the effects from a fertility shock it is vital that the effects on human capital are minimized. For a baby boom shock this implies that a higher fraction of output must be devoted to human capital accumulation, during the educational years of the baby boom generation. With respect to transfers to the old, the tax rate should not be fixed.

Suggested Citation

  • 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.
    • Handle: RePEc:hhs:uunewp:2005_013
    as

    Download full text from publisher

    File URL: http://uu.diva-portal.org/smash/get/diva2:107279/FULLTEXT01.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hassler, J. & Lindbeck, A., 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," Papers 631, Stockholm - International Economic Studies.
    2. Pecchenino, Rowena A. & Pollard, Patricia S., 2002. "Dependent children and aged parents: funding education and social security in an aging economy," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 145-169, June.
    3. Wagener, Andreas, 2004. "On intergenerational risk sharing within social security schemes," European Journal of Political Economy, Elsevier, vol. 20(1), pages 181-206, March.
    4. Leibowitz, Arleen, 1974. "Education and Home Production," American Economic Review, American Economic Association, vol. 64(2), pages 243-250, May.
    5. Boadway, Robin & Marchand, Maurice & Pestieau, Pierre, 1991. "Pay-as-You-Go Social Security in a Changing Environment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 4(4), pages 257-280, November.
    6. Frederic Docquier & Philippe Michel, 1999. "Education Subsidies, Social Security and Growth: The Implications of a Demographic Shock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 425-440, September.
    7. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    8. Kelvin R. Utendorf & Rowena A. Pecchenino, 1999. "Social security, social welfare and the aging population," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 607-623.
    9. Assar Lindbeck, 2002. "Pensions and Contemporary Socioeconomic Change," NBER Chapters, in: Social Security Pension Reform in Europe, pages 19-48, National Bureau of Economic Research, Inc.
    10. Alan J. Auerbach & Laurence J. Kotlikoff, 1984. "Simulating Alternative Social Security Responses to the Demographic Transition," NBER Working Papers 1308, National Bureau of Economic Research, Inc.
    11. Chakrabarti, Subir & Lord, William & Rangazas, Peter, 1993. "Uncertain Altruism and Investment in Children," American Economic Review, American Economic Association, vol. 83(4), pages 994-1002, September.
    12. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    13. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-1177, September.
    14. Blanchet, Didier & Kessler, Denis, 1991. "Optimal Pension Funding with Demographic Instability and Endogenous Returns on Investment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 4(2), pages 137-154, May.
    15. Kotlikoff, Laurence J & Summers, Lawrence H, 1981. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 706-732, August.
    16. ûystein ThÛgersen, 1998. "A note on intergenerational risk sharing and the design of pay-as-you-go pension programs," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(3), pages 373-378.
    17. Lord, William & Rangazas, Peter, 1991. "Savings and Wealth in Models with Altruistic Bequests," American Economic Review, American Economic Association, vol. 81(1), pages 289-296, March.
    18. Macunovich, Diane J, 1998. "Relative Cohort Size and Inequality in the United States," American Economic Review, American Economic Association, vol. 88(2), pages 259-264, May.
    19. Fougere, Maxime & Merette, Marcel, 1999. "Population ageing and economic growth in seven OECD countries," Economic Modelling, Elsevier, vol. 16(3), pages 411-427, August.
    20. Blomquist, N S & Wijkander, H, 1994. "Fertility Waves, Aggregate Savings and the Rate of Interest," Journal of Population Economics, Springer;European Society for Population Economics, vol. 7(1), pages 27-48.
    21. repec:bla:scandj:v:101:y:1999:i:3:p:425-40 is not listed on IDEAS
    22. Andreas Wagener, 2003. "Pensions as a portfolio problem: fixed contribution rates vs. fixed replacement rates reconsidered," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(1), pages 111-134, February.
    23. Dahlberg, Susanne & Nahum, Ruth-Aïda, 2003. "Cohort Effects on Earnings Profiles: Evidence from Sweden," Arbetsrapport 2003:3, Institute for Futures Studies.
    24. Easterlin, Richard A., 1987. "Birth and Fortune," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226180328, December.
    25. Berger, Mark C, 1985. "The Effect of Cohort Size on Earnings Growth: A Reexamination of the Evidence," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 561-573, June.
    26. Kotlikoff, Laurence J & Persson, Torsten & Svensson, Lars E O, 1988. "Social Contracts as Assets: A Possible Solution to the Time-Consistency Problem," American Economic Review, American Economic Association, vol. 78(4), pages 662-677, September.
    27. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Per Engstrom & Bertil Holmlund, 2009. "Tax evasion and self-employment in a high-tax country: evidence from Sweden," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2419-2430.
    2. Hallberg, Daniel, 2006. "Cross-national differences in income poverty among Europe´s 50+," Working Paper Series 2006:14, Uppsala University, Department of Economics.
    3. Fredrik Johansson-Tormod & Anders Klevmarken, 2022. "Explaining the Size and Nature of Response in a Survey on Health Status and Economic Standard," International Journal of Microsimulation, International Microsimulation Association, vol. 15(1), pages 63-77.
    4. Berg, Lennart & Berger, Tommy, 2005. "The Q theory and the Swedish housing market –an empirical test," Working Paper Series 2005:19, Uppsala University, Department of Economics.
    5. Jovan Zamac, 2005. "Pension Design when Fertility Fluctuates: The Role of Capital Mobility and Education Financing," CESifo Working Paper Series 1569, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Jovan Zamac, 2005. "Pension Design when Fertility Fluctuates: The Role of Capital Mobility and Education Financing," CESifo Working Paper Series 1569, CESifo.
    3. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    4. Pecchenino, Rowena A. & Pollard, Patricia S., 2002. "Dependent children and aged parents: funding education and social security in an aging economy," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 145-169, June.
    5. Werner, Katharina & Prettner, Klaus, 2015. "Public education and R&D-based economic growth," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112997, Verein für Socialpolitik / German Economic Association.
    6. Knell, Markus, 2010. "How automatic adjustment factors affect the internal rate of return of PAYG pension systems," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(1), pages 1-23, January.
    7. Kaganovich, Michael & Zilcha, Itzhak, 1999. "Education, social security, and growth," Journal of Public Economics, Elsevier, vol. 71(2), pages 289-309, February.
    8. Eric A. Hanushek & Victor Lavy & Kohtaro Hitomi, 2008. "Do Students Care about School Quality? Determinants of Dropout Behavior in Developing Countries," Journal of Human Capital, University of Chicago Press, vol. 2(1), pages 69-105.
    9. Åsa Johansson, 2016. "Public Finance, Economic Growth and Inequality: A Survey of the Evidence," OECD Economics Department Working Papers 1346, OECD Publishing.
    10. De Menil, Georges & Murtin, Fabrice & Sheshinski, Eytan & Yokossi, Tite, 2016. "A rational, economic model of paygo tax rates," European Economic Review, Elsevier, vol. 89(C), pages 55-72.
    11. Daren, Conrad, 2007. "Education and Economic Growth: Is There a Link?," MPRA Paper 18176, University Library of Munich, Germany, revised 2009.
    12. Emanuela Cardia & Serena Ng, 1997. "How Important are Intergenerational Transfers of Time? A Macroeconomic Analysis," Boston College Working Papers in Economics 395, Boston College Department of Economics.
    13. John Beirne & Nauro F. Campos, 2007. "Educational inputs and outcomes before the transition from communism," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15(1), pages 57-76, January.
    14. Soares, Jorge, 2003. "Self-interest and public funding of education," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 703-727, March.
    15. Behrman, Jere R., 1996. "Measuring the effectiveness of schooling policies in developing countries: Revisiting issues of methodology," Economics of Education Review, Elsevier, vol. 15(4), pages 345-364, October.
    16. Blankenau, William F. & Simpson, Nicole B., 2004. "Public education expenditures and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 583-605, April.
    17. Neri, F., 2001. "Schooling Quality and Economic Growth," Economics Working Papers wp01-06, School of Economics, University of Wollongong, NSW, Australia.
    18. Lucas Bretschger & Karen Pittel, 2005. "Innovative Investments, Natural Resources and Intergenerational Fairness: Are Pension Funds Good for Sustainable Development?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(III), pages 355-376, September.
    19. Annabi, Nabil & Harvey, Simon & Lan, Yu, 2011. "Public expenditures on education, human capital and growth in Canada: An OLG model analysis," Journal of Policy Modeling, Elsevier, vol. 33(6), pages 852-865.
    20. Roel Beetsma & Ward Romp, 2013. "Participation Constraints in Pension Systems," Tinbergen Institute Discussion Papers 13-149/VI, Tinbergen Institute.

    More about this item

    Keywords

    Intergenerational transfers; demography; social security; education;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:uunewp:2005_013. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ulrika Öjdeby (email available below). General contact details of provider: https://edirc.repec.org/data/nekuuse.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.