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Social Security Incentives, Human Capital Investment and Mobility of Labor

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  • Poutvaara, Panu

    (University of Munich)

Abstract

Migration between countries with earnings-related and flat-rate pay-as-you-go social security systems may change human capital investments in both countries. The possibility of emigration boosts investments in human capital in the country with flat-rate benefits. Correspondingly, those expecting to migrate from the country with earnings-related benefits to a country with flat-rate benefits may reduce their investment in education. With suitably planned transfers between the two countries, allowing for migration may generate a Pareto-improvement for all current and future generations. Without transfers, either country may be unable to pay for promised benefits when labor becomes mobile.

Suggested Citation

  • Poutvaara, Panu, 2005. "Social Security Incentives, Human Capital Investment and Mobility of Labor," IZA Discussion Papers 1729, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1729
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    Cited by:

    1. Tim Krieger, 2014. "Public Pensions and Immigration," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(2), pages 10-15, 07.
    2. Panu Poutvaara, 2021. "Population Aging and Migration," CESifo Working Paper Series 9105, CESifo.
    3. Svend E Hougaard Jensen & Thorsteinn Sigurdur Sveinsson & Gylfi Zoega, 2024. "Addressing Longevity Inequality: How Retirement Age Differentiation Can Be Implemented," CESifo Economic Studies, CESifo Group, vol. 70(1), pages 1-16.
    4. Noritaka Maebayashi, 2020. "Is an unfunded social security system good or bad for growth? A theoretical analysis of social security systems financed by VAT," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 1069-1104, August.
    5. Koethenbuerger, Marko, 2014. "Competition for migrants in a federation: Tax or transfer competition?," Journal of Urban Economics, Elsevier, vol. 80(C), pages 110-118.
    6. Helmuth Cremer & Catarina Goulão, 2014. "Migration and Social Insurance," Recherches économiques de Louvain, De Boeck Université, vol. 80(1), pages 5-29.
    7. Kai Konrad & Stergios Skaperdas, 2012. "The market for protection and the origin of the state," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 417-443, June.
    8. Gordon Hanson, 2010. "The Governance of Migration Policy," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(2), pages 185-207.
    9. Tim Krieger, 2014. "Public Pensions and Immigration," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(02), pages 10-15, July.
    10. Torberg Falch & Justina AV Fischer, 2008. "Does a generous welfare state crowd out student achievement? Panel data evidence from international student tests," TWI Research Paper Series 31, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    11. Falch, Torberg & Justina, Fischer, 2016. "Welfare state generosity and student performance: Evidence from international student tests 1980-2003," MPRA Paper 74553, University Library of Munich, Germany.
    12. Michael Gorski & Tim Krieger & Thomas Lange, 2007. "Pensions, Education and Life Expectancy," Working Papers CIE 4, Paderborn University, CIE Center for International Economics.
    13. Stefan Traub & Tim Krieger, 2009. "Wie hat sich die intragenerationale Umverteilung in der staatlichen Säule des Rentensystems verändert? Ein internationaler Vergleich auf Basis von LIS-Daten," LIS Working papers 520, LIS Cross-National Data Center in Luxembourg.
    14. Amrita Kulka & Till Nikolka & Panu Poutvaara & Silke Uebelmesser, 2023. "International Applicability of Education and Migration Aspirations," CESifo Working Paper Series 10395, CESifo.
    15. repec:ces:ifodic:v:12:y:2014:i:2:p:19116205 is not listed on IDEAS
    16. Igor Fedotenkov & Lex Meijdam, 2014. "Pension reform with migration and mobile capital: is a Pareto improvement possible?," International Economics and Economic Policy, Springer, vol. 11(3), pages 431-450, September.
    17. Giam Pietro Cipriani & Miltiadis Makris, 2012. "Payg Pensions And Human Capital Accumulation: Some Unpleasant Arithmetic," Manchester School, University of Manchester, vol. 80(4), pages 429-446, July.
    18. Tim Krieger & Thomas Lange, 2012. "Education, Life Expectancy and Pension Reform," Hacienda Pública Española / Review of Public Economics, IEF, vol. 202(3), pages 31-55, September.
    19. Krieger Tim & Traub Stefan, 2011. "Wie hat sich die intragenerationale Umverteilung in der staatlichen Säule des Rentensystems verändert? / Has Intragenerational Redistribution Become Less Important in Pension Systems’ Public Pillar?: ," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(2), pages 266-287, April.
    20. Tang, Le & Sun, Shiyu & Yang, Weiguo, 2021. "Investments in human capital: The evidence from China’s new rural pension scheme," Research in International Business and Finance, Elsevier, vol. 55(C).
    21. Falch, Torberg & Fischer, Justina AV, 2011. "Welfare state generosity and student performance: Evidence from international student tests," MPRA Paper 35269, University Library of Munich, Germany.
    22. Krieger, Tim, 2005. "Renten und Zuwanderung: Ein Überblick über neue Ergebnisse der Forschung," Arbeitspapiere der Nordakademie 2005-04, Nordakademie - Hochschule der Wirtschaft.
    23. Igor Fedotenkov, 2014. "Coordination of Pension Systems When Technologies are Different," CESifo Economic Studies, CESifo Group, vol. 60(1), pages 246-256.
    24. Lee, Kangoh, 2015. "Federalism, guns, and jurisdictional gun policies," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 141-153.
    25. Fedotenkov, I., 2012. "Pensions and ageing in a globalizing world. International spillover effects via trade and factor mobility," Other publications TiSEM 8830bc21-4138-4479-8459-a, Tilburg University, School of Economics and Management.

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    More about this item

    Keywords

    earnings-related and flat-rate pensions; migration; social security; education;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I2 - Health, Education, and Welfare - - Education
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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