The interplay between trade unions and the social security system in an aging economy

Max Friese

No 148, Thuenen-Series of Applied Economic Theory from University of Rostock, Institute of Economics

Abstract: The paper investigates the impacts of demographic change on the financial sustainability of a pay-as-you-go social security system in an economy with unemployment caused by trade unions. Using a simple two-period overlapping generations approach, it can be shown that the trade union behavior with respect to wage setting may have favorable effects on per capita contributions, if labor demand is sufficiently inelastic with respect to the wage rate. In contrast, if firm's labor demand reacts more sensitive to changes in the wage rate, the behavior of the trade union may amplify the imposed burden of demographic change on the social security system.

Keywords: demographic change; PAYG public pensions; trade unions; unemployment; tax burden; output elasticity of capital; wage elasticity of labor demand (search for similar items in EconPapers)
JEL-codes: E24 H55 J11 J51 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-age, nep-dge and nep-mac
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https://www.econstor.eu/bitstream/10419/149671/1/878862935.pdf (application/pdf)

Related works:
Working Paper: The interplay between trade unions and the social security system in an aging economy (2019)
Working Paper: The interplay between trade unions and the social security system in an aging economy (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:roswps:148

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