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Population growth and social security financing

Abstract.

By allowing the population growth to be flexible, this paper analyzes the effect of a tax reform that involves an introduction of consumption taxation for social security financing. It is found that population growth and labor supply play an important role in determining the effect of the tax reform. If population growth and labor supply are exogenous, then an introduction of a consumption tax for social security financing, with the payroll tax rate being endogenous, decreases the interest rate and increases capital accumulation. However, if population growth and labor supply are endogenous, then an introduction of a consumption tax for social security financing increases the interest rate and reduces capital accumulation.

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Received: 26 February 2001/Accepted: 26 August 2001

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Lin, S., Tian, X. Population growth and social security financing. J Popul Econ 16, 91–110 (2003). https://doi.org/10.1007/s001480100111

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  • DOI: https://doi.org/10.1007/s001480100111

  • JEL classification: H2
  • J2
  • Key words: Population growth
  • social security
  • capital accumulation
  • overlapping generations model