Social security, education, retirement and growth
ISSN: 0210-1173
Year of publication: 2011
Issue: 198
Pages: 9-36
Type: Article
More publications in: Hacienda Pública Española / Review of Public Economics
Abstract
This paper analyzes, firstly, the expected effects of social security reforms that have been implemented in Spain after 2004 (and, secondly, the expected effects of reductions in the minimum pension) on retirement decision and human capital accumulation (and hence on growth and on income inequality). Individuals in our model economy differ in their innate ability and growth is a by-product of the most skilled individuals� productivity. According to our model, i) increases in the minimum and normal retirement ages are expected to have a strong effect, not only on individuals� retirement decisions, but also on their education investment; ii) augmented incentives to late retirement are not expected to have any effect; iii) reductions in the minimum pension are not expected to have a significant effect unless it is completely eliminated.
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