Funded Pensions, Labor Market Participation, and Economic Growth

Eric O'N. Fisher, Mark A. Roberts
2003 FinanzArchiv / Public Finance Analysis (FA)  
This paper analyses a model of overlapping generations in which agents who do not participate in the labor market are unable to borrow. Thus an increase in a fully funded pension raises aggregate savings even with a fixed participation rate since private savings are not crowded out one-for-one. When labor force participation is determined endogenously, a rise in the level of fully funded pensions increases the aggregate labor supply. This in turn increases aggregate savings and growth, directly
more » ... by raising per capita savings and indirectly through tax and interest rate effects.
doi:10.1628/0015221032973636 fatcat:oz3diotkz5fl3pbnfdalvwdszy