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- Title
Pay-As-you-Go Pension, Human Capital Accumulation and Economic Growth.
- Authors
Kei Murata
- Abstract
In this paper, we consider the interaction between pay-as-you-go pension and economic growth pattern by overlapping-generations model mainly based on Groezen, Leers and Mejidam(2003) and Cardak(2004). In Groezen, Leers and Mejidam(2003), they consider the small open economy and the income level is equal to the wage rate. They assume that the individual's utility level is determined only by his own consumption level in all periods and the number of his children. But in this paper, we consider human capital accumulation and assume that the income level is determined not only by the wage rate but also the human capital level which the individual acquires. We assume that the human capital level is determined by the parental human capital level and the educational expenditure from his parent, and the individual's utility level is influenced by the educational expenditure to his children, which depends on Glomm and Ravikumar(1992) and Cardak(2004). In Glomm and Ravikumar(1992) and Cardak(2004), they assume that the population size in a period is constant. But in this paper, we assume that the number of children is determined by the individuals and the population size is variable. This assumption has an influence on the educational expenditure. Japan is known as an aging society and the government rises the rate of pension insurance to improve social security. In this paper, we suggest that this improvement has surprisingly positive effect on nationwide human capital accumulation, but there is no guarantee that it has positive effect on economic growth in a whole country.
- Subjects
JAPAN; HUMAN capital; CAPITAL gains; ECONOMIC expansion; PENSIONS; FREE trade; OVERLAPPING generations model (Economics)
- Publication
Global Business & Economics Anthology, 2022, Vol 1, p1
- ISSN
1553-1392
- Publication type
Article
- DOI
10.47341/GBEA.20127