Human capital accumulation, labor supply of the elderly and government policy

Mingzhu Li ()
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Mingzhu Li: School of Urban Governance and Public Affairs, Suzhou City University

Economics Bulletin, 2025, vol. 45, issue 2, 741 - 747

Abstract: This study examines the effect of the PAYG tax rate from short- and long-run perspectives using an overlapping-generations model with pay-as-you-go (PAYG) social security and retirement decision-making by the government. The findings are as follows: First, when the government is myopic, a tax rate exists that maximizes the utility of the present generation or some other generation in transition. In this case, the reason for introducing a PAYG pension is acknowledged. Second, when the government is concerned only with the economic growth rate in the long run, the tax rate has a negative effect on the economic growth rate, which means that PAYG social security should not be introduced. Third, the long-term economic growth rate can increase if retirement is prolonged.

Keywords: Human capital accumulation; Overlapping generations; PAYG pension system; Retirement (search for similar items in EconPapers)
JEL-codes: E6 I2 (search for similar items in EconPapers)
Date: 2025-06-30
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