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Capitalists, Workers And Social Security

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  • Thomas R. Michl

Abstract

This paper elaborates an exogenous growth model that nests overlapping generations of workers who save for life cycle reasons with dynastic agents who save for bequest reasons (‘capitalists’). The model overcomes Marglin's objection that the overlapping generations framework requires special assumptions about technology, and it also provides a natural environment to revisit Samuelson's analysis of lump‐sum transfers between generations. The ability of a benevolent planner to improve workers' welfare is severely restricted by the control capitalists exercise over the accumulation process. Prefunding social security assumes renewed significance because it overcomes this restriction.

Suggested Citation

  • Thomas R. Michl, 2007. "Capitalists, Workers And Social Security," Metroeconomica, Wiley Blackwell, vol. 58(2), pages 244-268, May.
    • Handle: RePEc:bla:metroe:v:58:y:2007:i:2:p:244-268
    DOI: 10.1111/j.1467-999X.2007.00267.x
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    References listed on IDEAS

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    5. Thomas R. Michl & Duncan K. Foley, 2004. "Social security in a Classical growth model," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(1), pages 1-20, January.
    6. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
    7. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    8. Paul A. Samuelson & Franco Modigliani, 1966. "The Pasinetti Paradox in Neoclassical and More General Models," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 33(4), pages 269-301.
    9. Thomas Michl, 1999. "Biased Technical Change and the Aggregate Production Function," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(2), pages 193-206.
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    Cited by:

    1. Kazuhiro Kurose, 2022. "A two-class economy from the multi-sectoral perspective: the controversy between Pasinetti and Meade–Hahn–Samuelson–Modigliani revisited," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 239-270, April.
    2. Daniele Tavani & Luca Zamparelli, 2014. "Public Goods, Redistribution, and Growth: A Classical Model," Working Papers 10/14, Sapienza University of Rome, DISS.
    3. Luca Zamparelli, 2017. "Wealth Distribution, Elasticity of Substitution and Piketty: An ‘Anti-Dual’ Pasinetti Economy," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 927-946, November.
    4. Linus Mattauch & Ottmar Edenhofer & David Klenert & Sophie Bénard, 2016. "Distributional Effects of Public Investment when Wealth and Classes are Back," Metroeconomica, Wiley Blackwell, vol. 67(3), pages 603-629, July.

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