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 taxburden in an economy with intergenerational trade in a fixed factor ofproduction, here labelled as land. We analyse a second-best environmentin which the government cannot resort to non-distortionary land taxes.Reducing the social security contribution rate encourages investment inhuman capital. Future efficiency gains accruing to complementary landare capitalized in its value. The capital gains may compensateland-owning pensioners for reduced benefits. We also explain why theunfunded pension system may have lost its appeal even for pensionersafter its introduction.

Date: 2006
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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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