Capital-Skill Complementarity and the Redistributive Effects of Social Security Reform

Alessandra Casarico and Carlo Devillanova

No 3773, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper analyses the general equilibrium implications of reforming pay-as-you-go pension systems in an economy with heterogeneous agents, human capital investment and capital-skill complementarity. It shows that increasing funding in the long-run delivers higher physical and human capital and therefore higher output, but also higher wage and income inequality. The latter affects preferences over the degree of redistribution of the remaining pay-as-you-go component: despite the greater role that redistribution could perform in the new steady state, we find a preference for lower redistribution for a larger group of the population.

Keywords: Capital-skill complementarity; Inter and intragenerational redistribution; Pay-as-you-go; Fully funded (search for similar items in EconPapers)
JEL-codes: H55 J31 (search for similar items in EconPapers)
Date: 2003-02
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Capital-skill complementarity and the redistributive effects of Social Security Reform (2008)
Working Paper: Capital-skill Complementarity and the Redistributive Effects of Social Security Reform (2003)
Working Paper: Capital-skill Complementarity and the Redistributive Effects of Social Security Reform (2003)
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