Social Security, Demographic Trends, and Economic Growth: Theory and Evidence from the International Experience / Isaac Ehrlich, Jinyoung Kim.

Format:

Book

Author/Creator:

Ehrlich, Isaac.

Contributor:

National Bureau of Economic Research.

Kim, Jinyoung.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11121.

NBER working paper series no. w11121

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Social Security, Demographic Trends, and Economic Growth

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

The worldwide problem with pay-as-you-go (PAYG) social security systems isn't just financial. This study indicates that these systems may have exerted adverse effects on key demographic factors, private savings, and long-term growth rates. Through a comprehensive endogenous-growth model where human capital is the engine of growth, family choices affect human capital formation, and family formation itself is a choice variable, we show that social security taxes and benefits can create adverse incentive effects on family formation and subsequent household choices, and that these effects cannot be fully neutralized by counteracting intergenerational transfers within families. We implement the model using calibrated simulations as well as panel data from 57 countries over 32 years (1960-92). We find that PAYG tax measures account for a sizeable part of the downward trends in family formation and fertility worldwide, and for a slowdown in the rates of savings and economic growth, especially in OECD countries.

Notes:

Print version record

February 2005.