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Journal of Population Economics

, Volume 23, Issue 2, pp 737–767 | Cite as

Growth and unemployment in an OLG economy with public pensions

  • Tetsuo OnoEmail author
Original Paper

Abstract

This paper develops an overlapping generations model including (1) a productive externality as an engine of endogenous growth and (2) wage setting by trade unions as the cause of unemployment. Within this framework, the paper considers growth and unemployment affected by public pensions under the following two types of pension system: the proportionate pension system where only the contributors, that is, the employed, receive pensions, and the lump-sum pension system where both the employed and the unemployed receive pensions. It is shown that public pensions create a trade-off between growth and employment in the former system, whereas they produce no trade-off in the latter.

Keywords

Public pensions Unemployment Overlapping generations Economic growth Union wage setting 

JEL Classification

E24 H55 J51 

Notes

Acknowledgements

The author would like to thank two anonymous referees and the editor of this journal, Alessandro Cigno, for their valuable comments and suggestions. Financial support from the JSPS through a Grant-in-Aid for Young Scientists (B) (No. 20730208) is gratefully acknowledged. All remaining errors are mine.

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.Graduate School of EconomicsOsaka UniversityToyonakaJapan

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