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Social Security Financial Crises

Author

Listed:
  • Rodrigo Cerda

    () (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

This paper explores the causes of the social security financial crises. We indicate that the financial crisis might be endogenous to the social security system. The main idea is that the PAYG social security system might affect fertility and human capital's decisions and therefore, may negatively impact the aggregated growth rate of the economy. These effects lead to an endogenous erosion of the financial basis of the PAYG social security program so that, as a consequence, the PAYG system is not sustainable and it requires continuous increases in the social security tax rate.

Suggested Citation

  • Rodrigo Cerda, 2003. "Social Security Financial Crises," Documentos de Trabajo 252, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:252
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    File URL: http://www.economia.uc.cl/docs/dt_252.pdf
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    More about this item

    Keywords

    Pay-as-you-go social security; demographic transition; financial crisis;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J1 - Labor and Demographic Economics - - Demographic Economics

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