scholarly journals Pay-as-You-Go Social Security and Educational Subsidy in an Overlapping Generations Model with Endogenous Fertility and Endogenous Retirement

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Hung-Ju Chen ◽  
Koichi Miyazaki

Abstract This study analytically investigates the effects of pay-as-you-go social security and educational subsidies on the fertility rate, retirement age, and GDP per capita growth rate in an overlapping generations model, where parents invest resources toward their children’s human capital. We find that an old agent retires fully when his or her labor productivity is low and retires later when the labor productivity is high. Under the unique balanced-growth-path (BGP) equilibrium, when an old agent is still engaged in work, tax rates are neutral to the fertility rate, higher tax rates encourage him or her to retire earlier, a higher social security tax rate depresses the GDP per capita growth rate, and a higher tax rate for educational subsidies can accelerate growth. However, when an old agent fully retires, higher tax rates increase the fertility rate, a higher social security tax rate lowers the GDP per capita growth rate, and a higher tax rate for educational subsidies boosts growth. Additionally, if an old agent’s labor productivity increases, the fertility rate also increases. We also conduct numerical simulations and analyze how an old agent’s labor productivity affects the retirement age, fertility rate, and GDP per capita growth rate under the BGP equilibrium.

2017 ◽  
Vol 18 (1) ◽  
Author(s):  
Hung-Ju Chen ◽  
Koichi Miyazaki

Abstract We investigate the effects of pay-as-you-go pension and child allowances on fertility, labor supply of the old, and welfare. For this purpose, we analyze a small open overlapping-generations model in which fertility and an old agent’s labor supply (retirement time) are endogenized with pay-as-you-go pension and child allowances. We find that how the pay-as-you-go pension tax rate affects the fertility rate depends on whether an old agent retires. When an old agent fully retires, then the size of the interest rate and fertility rate determine the effect of the pay-as-you-go pension tax rate on the fertility rate. When an old agent works, the pay-as-you-go pension tax rate certainly reduces the fertility rate. In addition, how child allowances affect the fertility rate depends on whether an old agent works. If an old agent retires fully, then an increase in the child allowance tax rate increases the fertility rate. When an old agent works, this is not necessarily true, which suggests that an old agent’s labor status should be taken into account when we evaluate the effects of the social security system on economic variables. In addition, we examine the effect of the social security tax rates on welfare and provide numerical examples.


2016 ◽  
Vol 8 (9) ◽  
pp. 1
Author(s):  
Leran Wang

<p>This study analyzes how a social security system composed of a public pension, child allowances, and unemployment insurance affects endogenous fertility and unemployment when the wage level is endogenously set by monopolistic trade unions in an overlapping generations model. The analysis reveals, first, that increased pension tax rates lead to a higher fertility rate when wages are higher but a lower rate when wages are lower. Second, an increased child allowances tax rates lead to an increased fertility rate when wages are lower but a decreased rate when wages are higher. Therefore, both social security and wage setting should be considered in order to improve fertility and reduce unemployment.</p>


2010 ◽  
Vol 100 (1) ◽  
pp. 337-363 ◽  
Author(s):  
Xavier Mateos-Planas

This article studies the effects of demographics on the mix of tax rates on labor and capital. It uses a quantitative general-equilibrium, overlapping-generations model where tax rates are voted without past commitments in every period and characterized as a Markov equilibrium. In the United States, the younger voting-age population in 1990 compared to 1965 accounts for the observed decline in the relative capital tax rate between those two years. A younger population raises the net return to capital, leads voters to increase their savings, and results in a preference for lower taxes on capital. Conversely, aging might increase capital taxation. (JEL E13, H24, H25, J11)


2017 ◽  
Vol 23 (2) ◽  
pp. 870-887
Author(s):  
Koichi Miyazaki

This paper considers an overlapping-generations model with pay-as-you-go social security and retirement decision making by an old agent. In addition, this paper assumes that labor productivity depreciates. Under this setting, socially optimal allocations are examined. The first-best allocation is an allocation that maximizes welfare when a social planner distributes resources and forces an old agent to work and retire as she wants. The second-best allocation is one that maximizes welfare when a social planner can use only pay-as-you-go social security in a decentralized economy. This paper finds a range of an old agent's labor productivity such that the first-best allocation is achieved in a decentralized economy. This finding differs from that in Michel and Pestieau [“Social security and early retirement in an overlapping-generations growth model”, Annals of Economics & Finance, 2013], which notes that the first-best allocation cannot be achieved in a decentralized economy.


2021 ◽  
pp. 1-19
Author(s):  
PARTHA SEN

Pay-as-you-go social security schemes in the Organisation for Economic Co-operation and Development countries are facing solvency problems, as people are living longer and birth rates have declined. Postponing the full retirement age (FRA), when retirees are entitled to full pension, has been proposed as a solution. This effectively lowers the payroll tax rate since pension is paid only in the post-FRA period. In a two-period two-sector overlapping generations model, I show that this shift lowers savings (because a part of the expected old-age income is consumed in the first period), as employment increases. In the transition to the new steady state, capital is decumulated and the wage rate falls. Contrast this with a reduction of the payroll tax rate where the initial old suffer reduced consumption, but the young have higher post-tax income and this spurs capital accumulation.


2016 ◽  
Vol 60 (2) ◽  
pp. 26-39
Author(s):  
V. Varnavskii

The article considers the main trends and factors of US economic growth. Economic and technological reasons for slowdown of US Gross Domestic Product (GDP), GDP per capita and productivity are discussed. The author focuses on the estimates of key macroeconomic indicators published by the Bureau of Economic Analysis, Bureau of Labor Statistics and other government agencies for analyzing historical growth and identifying factors contributions. Also, the article discusses points of view on the potential factors for continued economic growth in the future, including the statistics and calculations of the American economists. It is shown that the United States is nowadays facing fundamental problems of productivity, not just a cyclical downturn. A number of disturbing tendencies in the US economy, such as negative trends in both labor productivity and multifactor productivity (MFP) emerged well before the economic and financial crises of 2008 (Great Recession). As the author note, the US has entered into a period of relatively low GDP growth rate in comparison with 1990 – early 2000s. A reduction also occurred in the growth rate of GDP per capita, labor productivity and other indicators. Special attention is addressed to the roles of the Information and Communication Technologies (ICT). Since mid-1990 the large-scale investments into the ICT provided a great portion of US economic growth and productivity. However, in the last 10 years the contribution of ICT to productivity growth noticeably reduced from its maximum value in 1995–2004. Nonetheless, it remains sizable and still contributes about one-fifth of the GDP growth and more than 40% of the growth in labor productivity. The author’s general conclusion is that, despite the existing problems in economic growth, United States remains the world’s most productive economy and the largest market for ICT goods and services. This is likely to continue encouraging the nation’s economic growth and productivity, although at a slower pace.


2012 ◽  
Vol 17 (6) ◽  
pp. 1198-1226 ◽  
Author(s):  
Luca Bossi ◽  
Gulcin Gumus

In this paper, we set up a three-period stochastic overlapping-generations model to analyze the implications of income inequality and mobility for demand for redistribution and social insurance. We model the size of two different public programs under the welfare state. We investigate bidimensional voting on the tax rates that determine the allocation of government revenues among transfer payments and old-age pensions. We show that the coalitions formed, the resulting political equilibria, and the demand for redistribution crucially depend on the level of income inequality and mobility.


2021 ◽  
Vol 36 (Supplement_1) ◽  
Author(s):  
A Lass ◽  
G Lass

Abstract Study question Are there any correlations between a country’s wealth determined by GDP per capita and its total fertility rate (TFR) and utilisation of ART in Europe? Summary answer There is strong correlation across Europe between GDP and utilisation of ART. This correlation does not exist when only investigating the European Economic Area (EEA) What is known already The number of documented ART cycles has increased significantly from 203,893 cycles in 1997 (first European report) to 918,159 in 2016. During the same period, growth was observed in European GDP and, to a lesser extent, TFR following a significant and prolonged decline. Global data suggest that utilisation rate is higher in developed countries, speculated to be due to either generous reimbursement systems or higher affordability for patients paying out of pocket. This study analysed for the first time the relationships between national GDP, TFR and utilisation in Europe both as a whole, and specifically the more affluent EEA Study design, size, duration This study was an analysis of publicly available primary international reports: total cycles in the European IVF-monitoring Consortium (EIM) and TFR, GDP and population size from the World Bank indicators (https://data.worldbank.org/indicator). The period studied ranged from the first EIM report for 1997 (published in 1999) to the 20th report for 2016 (published in 2020). Participants/materials, setting, methods TFR was described as births per women (BPW) and country wealth was presented as GDP per capita in US Dollars. Utilisation rate was defined as the total national number of cycles (fresh IVF and ICSI, and frozen embryo transfer) divided per population, and presented as cycles per million (CPM). When utilisation was not reported, total cycles were projected by proportional calculation. Pearson Correlations were calculated using Sigmaplot for utilisation, GDP and TFR in 2016 Main results and the role of chance Forty countries were included in the EIM report for 2016, of which 18 reported in full. The median utilisation rate was 1280 CPM (range 162 - 3,156) and median TFR was 1.6 BPW (range 1.26 - 2.73); only one country, Kazakhstan, had a TFR above the natural fertility replacement level of 2.1 BPW. Mean GDP was $31604 per capita (range $10,610 - $110,650). There was no correlation between TFR and utilisation or between TFR and GDP, however there was a significant positive correlation between GDP and CPM (correlation coefficient = 0.428; P = 0.00661). Compared to Europe as a whole, analysis of only the EEA countries – EU member states plus Norway, Iceland, and Switzerland – revealed a similar median TFR (1.59), but a 27% increase in the utilisation rate to 1629 CPM (range: 317 – 3157) and 24% rise in GDP per capita to $39,300 (range: $19,885- $110,650). For the EEA, no significant correlations were observed, including between GDP and utilisation (correlation coefficient = 0.131; P = 0.507). Additionally, there was no significant correlation between TFR and GDP in the EU for the period of 1997 – 2016. Limitations, reasons for caution The data is a snapshot of a single year, but we observed similar outcomes in previous years. Projection calculation of utilisation in partially reporting countries may cause bias, however, with a reporting level of 92% (1347 of 1467 clinics), this bias is probably very limited. Wider implications of the findings: Findings of this study confirm that there are strong disparities in the availability of ART even in Europe. This difference does not exist in the more affluent countries in Europe suggesting that the reason for lower utilisation in lower-income countries being reduced affordability. Trial registration number NA


2020 ◽  
pp. 1-32 ◽  
Author(s):  
Emanuel Gasteiger ◽  
Klaus Prettner

We assess the long-run growth effects of automation in the overlapping generations framework. Although automation implies constant returns to capital and, thus, an AK production side of the economy, positive long-run growth does not emerge. The reason is that automation suppresses wage income, which is the only source of investment in the overlapping generations model. Our result stands in sharp contrast to the representative agent setting with automation, where sustained long-run growth is possible even without technological progress. Our analysis therefore provides a cautionary tale that the underlying modeling structure of saving/investment decisions matters for the derived economic impact of automation. In addition, we show that a robot tax has the potential to raise per capita output and welfare at the steady state. However, it cannot induce a takeoff toward positive long-run growth.


2019 ◽  
Vol 11 (14) ◽  
pp. 3928 ◽  
Author(s):  
Lin Ma ◽  
Manhua Wu ◽  
Xiujuan Tian ◽  
Guanheng Zheng ◽  
Qinchuan Du ◽  
...  

The growth of vehicle ownership not only brings opportunity for the economy, but also brings environment and transport problems, which is not good for sustainable transportation. It is of great significance to build supporting infrastructure and other services based on accurate forecasts of vehicle ownership in various provinces because of the variance of economic development stages, the carrying capacity of resources, and different degrees of transport planning in each province. We used the Gompertz model in order to predict China’s provincial vehicle ownership from 2018 to 2050. Considering the impact of the population structure, we summed up the growth rate of GDP per labor, the growth rate of population and the growth rate of employment rate to get the growth rate of GDP and then the GDP per capita of each province. We found that the vehicle ownership in each province will grow rapidly in the next 30 years; however, the change in the ranking of vehicle ownership among provinces varies. The ranking of some provinces with high or middle ranking now will decline in the following years, especially Beijing, Tianjin, Shanghai and Xinjiang. While the ranking of some provinces that locates in the middle and low ranking now will increase, such as Chongqing, Hubei, Anhui, Sichuan, Heilongjiang, Jiangxi, Hunan and Guangxi. We also investigate the reasons that affect the trend in each province and we find that the suitable vehicle growth pattern of each province, the stage of economic development and government policy, which are related to the growth rate of GDP per labor, employment rate, and GDP per capita, can affect vehicle ownership in the future.


Sign in / Sign up

Export Citation Format

Share Document