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Life Expectancy, Human Capital, Social Security and Growth

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  • Echevarría Olave, Cruz Ángel
  • Iza Padilla, María Amaya

Abstract

We analyze the effects of changes in the mortality rate upon life expectancy, education, retirement age, human capital and growth in the presence of social security. We build a vintage growth, overlapping generations model in which individuals choose the time length of education and retirement age, and where unfunded social security pensions depend on workers'past contributions. Social security has a positive effect on education, but pension benefits favor reductions in retirement age. The net effect is that starting from a benchmark case, higher life expectancies give rise to lower growth rates in the presence of social security as the share of active population is reduced. In addition, higher social security contribution rates reduce the growth rate.

Suggested Citation

  • Echevarría Olave, Cruz Ángel & Iza Padilla, María Amaya, 2005. "Life Expectancy, Human Capital, Social Security and Growth," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    • Handle: RePEc:ehu:dfaeii:6723
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    Cited by:

    1. Echevarria, Cruz A. & Iza, Amaia, 2006. "Life expectancy, human capital, social security and growth," Journal of Public Economics, Elsevier, vol. 90(12), pages 2323-2349, December.

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