Social Security Policy and International Labor and Capital Mobility

Doris Geide-Stevenson

Review of International Economics, 1998, vol. 6, issue 3, 407-16

Abstract: This paper studies the connection between social security policy and international factor movements within a two-country overlapping-generations model with production. Incentives for factor movements emerge because one country relies on private savings while the other country operates a social security system. The pattern of migration depends on the steady-state capital-labor ratios compared with the Golden Rule capital-labor ratios. Incentives to migrate do not vanish in the long run and one country might empty out. Capital always moves to the social-security country. Without compensation neither labor nor capital mobility represents a Pareto improvement for the economy. Copyright 1998 by Blackwell Publishing Ltd.

Date: 1998
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