Education, Pensions, and Demography

Sammanfattning: This dissertation comprises three essays on demography and intergenerational transfers.Essay 1 investigates the general equilibrium effects of a fertility shock under different intergenerational transfer schemes; where the workers provide for the young and the retired. The analysis concerns the closed economy where fertility fluctuations affect factor prices, besides intergenerational flows. How savings, factor prices, and growth evolve does not only differ quantitatively but could also differ qualitatively, depending on intergenerational transfers. How sensitive the results are to different assumptions about intergenerational transfers depends on how education investments affect future productivity.Essay 2 compares alternative designs of an unfunded pension system. The objective is to maximize the expected ex-ante welfare under stochastic fertility. The model is a three-period CGE framework where the financing of education and effects on factor prices are accounted for. Factor prices depend on the degree of capital mobility. For low degrees of capital mobility, it is optimal to have a fixed benefit rate in the pension system. But for the small open economy, a fixed contribution rate is optimal if the education system has a fixed benefit rate. In this case individuals in the small open economy are unaffected by fertility fluctuations.Essay 3 considers how to design unfunded pension system with respect to longevity uncertainty. The aim is to find the optimal design of behind the veil of ignorance.The model is a computable overlapping generations model where the effects on labor supply and human capital are accounted for. Individuals decision to enter and exit the labor force is endogenous. Results show that it is important to be able to alter the retirement time in response to a longevity shock. When this is possible then there is nocrucial difference between the different pension designs. If it is not possible to alter the retirement time then the fixed benefit rate is preferred. This means that pensions should not change when old age dependency changes but that taxes should adjust instead. In this case the design of the pension system will also have an impact on the labor supply.