TY  - JOUR
AU  - Ehrlich,Isaac
AU  - Kim,Jinyoung
TI  - Social Security, Demographic Trends, and Economic Growth: Theory and Evidence from the International Experience
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11121
PY  - 2005
Y2  - February 2005
UR  - http://www.nber.org/papers/w11121
L1  - http://www.nber.org/papers/w11121.pdf
N1  - Author contact info:
Isaac Ehrlich
415 Fronczak Hall
State University of New York at Buffalo
and Center for Human Capital
Box 601520
Buffalo, NY 14260-1520
Tel: 716/645-2121ext 421
Fax: 716/645- 2127
E-Mail: mgtehrl@buffalo.edu

Jinyoung Kim
Department of Economics
Korea University
5-1, Anam-Dong, Sungbuk-Ku
Seoul, Korea 136-701
Tel: 011-82-2-3290-2202
Fax: 011-82-2-3290-2202
E-Mail: jinykim@korea.ac.kr
AB  - 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.
ER  -