EconPapers    
Economics at your fingertips  
 

Pay-as-You-Go Social Security and Educational Subsidy in an Overlapping Generations Model with Endogenous Fertility and Endogenous Retirement

Hung-Ju Chen and Koichi Miyazaki ()

The B.E. Journal of Macroeconomics, 2022, vol. 22, issue 2, 787-820

Abstract: This study analytically investigates the effects of pay-as-you-go social security and educational subsidies on the fertility rate, retirement age, and GDP per capita growth rate in an overlapping generations model, where parents invest resources toward their children’s human capital. We find that an old agent retires fully when his or her labor productivity is low and retires later when the labor productivity is high. Under the unique balanced-growth-path (BGP) equilibrium, when an old agent is still engaged in work, tax rates are neutral to the fertility rate, higher tax rates encourage him or her to retire earlier, a higher social security tax rate depresses the GDP per capita growth rate, and a higher tax rate for educational subsidies can accelerate growth. However, when an old agent fully retires, higher tax rates increase the fertility rate, a higher social security tax rate lowers the GDP per capita growth rate, and a higher tax rate for educational subsidies boosts growth. Additionally, if an old agent’s labor productivity increases, the fertility rate also increases. We also conduct numerical simulations and analyze how an old agent’s labor productivity affects the retirement age, fertility rate, and GDP per capita growth rate under the BGP equilibrium.

Keywords: pay-as-you-go social security; educational subsidy; fertility; endogenous retirement; GDP per capita growth rate (search for similar items in EconPapers)
JEL-codes: H55 I25 J13 J26 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1515/bejm-2021-0046 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Pay-as-you-go social security and educational subsidy in an overlapping generations model with endogenous fertility and endogenous retirement (2021) Downloads
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:bpj:bejmac:v:22:y:2022:i:2:p:787-820:n:8

Ordering information: This journal article can be ordered from
https://www.degruyter.com/view/j/bejm

DOI: 10.1515/bejm-2021-0046

Access Statistics for this article

The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti

More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

 
Page updated 2023-01-08
Handle: RePEc:bpj:bejmac:v:22:y:2022:i:2:p:787-820:n:8