Education, Life Expectancy and Pension Reform

Tim Krieger and Thomas Lange

Hacienda Pública Española / Review of Public Economics, 2012, vol. 202, issue 3, 31-55

Abstract: In a two-period model with agent heterogeneity we analyze a pension reform toward a stronger link between contributions and benefits (as recently observed in several countries) in a pension system with a Bismarckian and a Beveridgean component. We show that such a policy change may discourage human capital investment at the margin and thus reduce the average educational level in an economy. The life expectancy differential between skilled and unskilled individuals drives this result. Furthermore, we investigate the consequences on the intragenerational redistribution characteristics of the pension system –in the sense of the number of net-recipients relative to net-payers– as well as welfare effects.

Keywords: Social Security; Education; Life Expectancy; Pension Reform; Redistribution (search for similar items in EconPapers)
JEL-codes: D39 H55 I21 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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