Unemployment, Income Growth and Social Security

Watanabe, Minoru and Miyake, Yusuke and Yasuoka, Masaya (2018): Unemployment, Income Growth and Social Security.

Abstract

Considering the sustainability of social security in an aging society with fewer children, income growth and population growth are important factors. With a decrease in income growth or population growth, social security transfers such as pension benefits cannot be provided. The intergenerational social security benefit is being reassessed in some OECD countries. In Japan, social security benefits for younger people are small because of an aging society. This paper presents description of an unemployment model with a minimum wage and social security benefits and presents examination of how unemployment benefits for the younger people affect income growth, fertility, and welfare. The results described herein demonstrate that unemployment benefits raise the capital stock and income level per capita. Therefore, this benefit should be provided to maintain the tax revenue for social security. Moreover, this benefit can increase social welfare.

• Item Type: MPRA Paper
• Language: English
• Keywords: Minimum wage, Social security, Unemployment
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search

References

Acemoglu D. (1999) "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, vol.89(5), pp.1259-1278.

Acemoglu D. and Shimer R. (1999) "Efficient Unemployment Insurance," Journal of Political Economy, vol.107(5), pp.893-928.

Aronsson T., Sjögren T. and Dalin T. (2009) "Optimal Taxation and Redistribution in an OLG Model with Unemployment," International Tax and Public Finance, vol.16, pp.198-218.

Bräuninger M.(2005) "Social Security, Unemployment, and Growth," International Tax and Public Finance, vol.12, pp.423-434.

Burdett K., Lagos R. and Wright R. (2003) "Crime, Inequality, and Unemployment," American Economic Review, vol.93(5), pp.1764-1777.

Corneo G. and Marquardt M. (2000) "Public Pensions, Unemployment Insurance, and Growth," Journal of Public Economics, vol.75, pp.293-311.

Diamond P.A. (1965) "National Debt in a Neoclassical Growth Model," American Economic Review, vol.55(5), pp.1126-1150.

Fanti L. and Gori L. (2007) "Income Taxation, Child-Rearing Policies, Fertility and Unemployment," Economics Bulletin, vol.10(18), pp.1-10.

Fanti L. and Gori L. (2011) "On Economic Growth and Minimum Wage," Journal of Economics, vol.103, pp.59-82.

Gomis-Porqueras P., Julien B. and Wang C. (2013) "Optimal Monetary and Fiscal Policies in a Search-Theoretic Model of Money and Unemployment," Macroeconomic Dynamics, vol.17, pp.1330-1354.

Grossman G. M. and Yanagawa N. (1993) "Asset Bubbles and Endogenous Growth," Journal of Monetary Economics, vol.31(1), pp.3-19.

Imoto S. (2003) "An Example of Nonlinear Endogenous Business Cycle Model: Build in the Trade Union," Economic Letter, vol.81, pp.117-124.

Lee D. and Saez E. (2012) "Optimal Minimum Wage Policy in Competitive Labor Markets," Journal of Public Economics, vol.96, pp.739-749.

Lehmann E., Parmentier A. and van Der Linden B. (2011) "Optimal Income Taxation with Endogenous Participation and Search Unemployment," Journal of Public Economics, vol.95, pp.1523-1537.

Omori T. (2009) "Effects of Public Education and Social Security on Fertility, " Journal of Populations Economics, vol.22, pp.585-601.

Ono T. (2007) "Unemployment Dynamics in an OLG Economy with Public Pensions," Economic Theory, vol.33, pp.549-577.

Ono T. (2010) "Growth and Unemployment in and OLG Economy with Public Pension," Journal of Population Economics, vol.23, pp.737-767.

Romer P. (1990) "Endogenous Technological Change," Journal of Political Economy, vol. 98(5), pp.71-102.

Sinko P. (2007) "Labour Taxation, Job Creation and Job Dstriction-Focusing on the Role of Wage Setting," International Tax and Public Finance, vol.14, pp.583-604.

Tamai T. (2009) "Inequality, Unemployment, and Endogenous Growth in a Political Economy with a Minimum Wage," Journal of Economics, vol. 97(3), pp.217-232.

Van Groezen, B. Leers, T. and Meijdam L. (2003), "Social Security and Endogenous Fertility: Pensions and Child Allowances as Siamese Twins," Journal of Public Economics, vol.87, pp.233-251.

Wang L. (2015) "Fertility and Unemployment in a Social Security System," Economic Letters, vol.133, pp.19-23.