 Fostering Within-Family Human Capital Investment: An Intragenerational Insurance Perspective of Social SecurityMartin Barbie, Marcus Hagedorn and Ashok Kaul No 236, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich Abstract: We propose an extended PAYG social security system that conditions pension benefits on the aggregate wage sum and on the wage of one�s children. The latter increases parents� incentives to provide their children with good within-family education. However, since wages depend stochastically on parents� unobservable investment in their children�s human capital, some insurance against the productivity risk of one�s children is provided because retirement income still depends on aggregate wages. We analyze the effects of such a social security system on the endogenous distribution of human capital and compare it to real world systems which typically do not condition benefits on the wages of one�s children. Our approach suggests a novel role for a well-designed social security system: it can foster human capital accumulation and act as an intra-generational insurance against productivity risk. Keywords: Human Capital Formation; Social Security; Intragenerational Insurance; Heterogenous Households (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:236 Access Statistics for this paper More papers in IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich |
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