The Outlines of a Possible Pension System Funded with Human Capital

The broadly used pay-as-you-go (PAYG) pension system is intrinsically wrong. The essence of the problem is that the PAYG system distributes the yield of raising children, i.e., of human capital investment (which is essentially the pension contribution), in such a way that it disregards the extent to which individuals have contributed to this, and even whether it has occurred at all. This error can be corrected if we take the pension contribution to be the yield on an investment of human capital, and as such use this to pay back the costs and expenses of the raising of the contribution payer—overall to those who paid these costs and expenses at the time. Accordingly, the central question of my study is whether it is possible to construct a consistent pension system based on the above foundations, and how my ideas may be inserted into the Diamond–Samuelson model. The method of the study was logical analysis and the construction of a theoretical mathematical model. The results of the study show that it is possible to construct a public pension system that operates according to a different logic than today’s system, a system which is free from the effects of demographic fluctuations, which does not motivate the refusal to have children, and which will remain self-sufficient under all circumstances. The study achieves this by presenting a possible pension system of this kind in detail. Via the suitable modification of the Diamond–Samuelson model, I have succeeded in showing that the pension system I am proposing increases the willingness to have children up to the social optimum, in contrast to the fully (but traditionally) funded and PAYG systems. This system currently only exists in theory and may be regarded as a major theoretical innovation, which naturally has certain (although not particularly extensive) antecedents. Its introduction could enable the resolution of the contradictions of existing pension systems and could also provide a solution to the as yet unsolved problem of the increasingly expensive regeneration of human capital, and as such, its potential practical implications are immeasurable.

International Real Estate Review

This paper examines why housing and services are more expensive in rich countries than in poor ones. We propose the Rich Neighborhood Housing Effect (RNHE), which explicitly allows for local labor force heterogeneity with a coherent supply- demand framework that incorporates demand-side factors such as the Linder effect. We also develop a contemporary RNHE model that predicts different behavior of the national price level between high-income and low-income countries. These predictions are confirmed by the panel data from 1990 to 2010 and simultaneous equation estimations. These results are compelling evidence in favor of the RNHE model over the Balassa-Samuelson model.

A Nonsmooth Extension of Samuelson’s Multiplier-Accelerator Model

Dynamical-systems approaches have historically been used in business-cycle theory to generate sustained oscillations in macroeconomic variables. We aim to contribute to this literature by extending the original Samuelson multiplier-accelerator model with a discontinuous stabilization policy in terms of government expenditure. We show that the nonsmoothness yields dynamics in terms of periodic orbits and irregular fluctuations, not found in the original Samuelson model. We also note with particular interest that our model is able to generate localized nonstationary dynamics, which is in contrast to the most standard models found in the literature.

Differential Representation of a Samuelson Model with a Telegraph Drift

In this paper we construct a system of three stochastic differential equations, which has a solution composed of a generalized telegraph signal process and a basic process. This system enabled us to find the escape probability of the basic process from an interval through its endpoint.

Analysis of Composition of Workers in Indian Manufacturing Industries

The Hecksher Ohlin (H-O) theoretical arguments and their further implications drawn by the Stopler-Samuelson model argue that, based on factor cost advantages, the labour surplus developing economies would have comparative advantage in producing and exporting labour intensive products, while the capital abundant developed economies would have comparative advantage in producing and exporting capital intensive products. This in turn would generate demand for less skilled workers in the developing economy and that of more skilled workers in the developed economies. However, contrary to the H-O trade theoretic predictions of rising relative demand for sector specific unskilled or less skilled employment in developing economies, empirical evidence for India suggests a different picture across different industries in Indian manufacturing sector.