Abstract
We examine the balanced growth effects of pension plans on the rate of growth and on income dispersion in a closed economy where individual decisions about education are the engine of growth. We distinguish between pay-as-you-go and fully funded pension systems and differentiate between three different benefit rules: a Beveridgean regime, a Bismarckian regime depending on one's entire earnings history and on one's partial earnings history. Our analysis shows that social security generally reduces the long-run growth rate and our inequality measure. Growth can only be stimulated under a fully funded scheme based on partial earnings history.
Original language | English |
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Article number | 1 |
Pages (from-to) | 47-71 |
Number of pages | 25 |
Journal | Journal of Macroeconomics |
Volume | 25 |
Issue number | 1 |
DOIs | |
Publication status | Published - Mar 2003 |
Externally published | Yes |
Keywords
- Education
- Growth
- Inequality
- Public pensions