Our objective is to illustrate how different social security systems may affect lifelong educational decisions, retirement and welfare. We integrate human capital formation and retirement decisions into a computable life cycle model. The model is calibrated to a non-actuarial Beveridgean system. It generates a plausible allocation of time over the life cycle and provides one explanation for the existence and persistence of wage differentials over the life cycle. We analyze steady state equilibrium effects of replacing the initial social security system with an actuarial Beveridgean system, a non-actuarial Bismarckian system and an actuarial Bismarckian system, respectively.
JEL classification: H55, I21, J22, C68
Keywords: social security, education, labor supply, computable general equilibrium models
Length: 39 pages
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