Social Security Reform and National Wealth

John Laitner

Scandinavian Journal of Economics, 2000, vol. 102, issue 3, 349-371

Abstract: Recent trends in common stock prices suggest a distinction between increases in national net worth and flows of physical investment. In this paper we present a simple overlapping generations model in which such differences can arise: technological progress occurs exogenously, yet firms own new technologies for a time. We examine possible consequences for social security reform. Reform which increases private saving depletes part of its force raising the (capitalized) price of proprietary technologies. A calibrated example suggests an increase in physical capital one‐third smaller than without inelastic factors. Both steady states and transition paths are considered.

Date: 2000
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