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| Mingzhu Li |
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| ''Human capital accumulation, labor supply of the elderly and government policy'' |
| ( 2025, Vol. 45 No.2 ) |
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| This study examines the effect of the PAYG tax rate from short- and long-run perspectives using an overlapping-generations model with pay-as-you-go (PAYG) social security and retirement decision-making by the government. The findings are as follows: First, when the government is myopic, a tax rate exists that maximizes the utility of the present generation or some other generation in transition. In this case, the reason for introducing a PAYG pension is acknowledged. Second, when the government is concerned only with the economic growth rate in the long run, the tax rate has a negative effect on the economic growth rate, which means that PAYG social security should not be introduced. Third, the long-term economic growth rate can increase if retirement is prolonged. |
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| Keywords: Human capital accumulation, Overlapping generations, PAYG pension system, Retirement |
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
I2 - Education: General |
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| Manuscript Received : May 15 2023 | | Manuscript Accepted : Jun 30 2025 |
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