Social security reform and investment in education: Is there scope for a Pareto improvement?

Marko Köthenbürger and Panu Poutvaara
Authors registered in the RePEc Author Service: Marko Koethenbuerger

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: We propose a Pareto-improving policy which reduces the overall wage tax burden in an economy with intergenerational trade in a fixed factor of production, here labelled as land. We analyse a second-best environment in which the government cannot resort to non-distortionary land taxes. Reducing the social security contribution rate encourages investment in human capital. Future efficiency gains accruing to complementary land are capitalized in its value. The capital gains may compensate land-owning pensioners for reduced benefits. We also explain why the unfunded pension system may have lost its appeal even for pensioners after its introduction.

Date: 2006
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Citations: View citations in EconPapers (11)

Published in Economica 290 73(2006): pp. 299-319

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Related works:
Journal Article: Social Security Reform and Investment in Education: Is There Scope for a Pareto Improvement? (2006)
Working Paper: Social security reform and investment in education: Is there scope for a Pareto improvement? (2006)
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