Social Security, Demographic Trends, and Economic Growth: Theory and Evidence from the International Experience
Isaac Ehrlich () and
Jinyoung Kim
No 11121, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
The worldwide problem with pay-as-you-go (PAYG) social security systems isn't just financial. This study indicates that these systems may have exerted adverse effects on key demographic factors, private savings, and long-term growth rates. Through a comprehensive endogenous-growth model where human capital is the engine of growth, family choices affect human capital formation, and family formation itself is a choice variable, we show that social security taxes and benefits can create adverse incentive effects on family formation and subsequent household choices, and that these effects cannot be fully neutralized by counteracting intergenerational transfers within families. We implement the model using calibrated simulations as well as panel data from 57 countries over 32 years (1960-92). We find that PAYG tax measures account for a sizeable part of the downward trends in family formation and fertility worldwide, and for a slowdown in the rates of savings and economic growth, especially in OECD countries.
JEL-codes: J1 O1 (search for similar items in EconPapers)
Date: 2005-02
New Economics Papers: this item is included in nep-lab
Note: AG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)
Published as "Social security and demographic trends: Theory and evidence from the international experience", Review of Economic Dynamics, Volume 10, Issue 1, January 2007, Pages 55-77
Downloads: (external link)
http://www.nber.org/papers/w11121.pdf (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11121
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11121
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().