Download This PaperSocial Security Incentives, Human Capital Investment and Mobility of Labor
18 Pages Posted: 8 Sep 2005 Last revised: 7 May 2025
Abstract
Migration between countries with earnings-related and flat-rate pay-as-you-go social security systems may change human capital investments in both countries. The possibility of emigration boosts investments in human capital in the country with flat-rate benefits. Correspondingly, those expecting to migrate from the country with earnings-related benefits to a country with flat-rate benefits may reduce their investment in education. With suitably planned transfers between the two countries, allowing for migration may generate a Pareto-improvement for all current and future generations. Without transfers, either country may be unable to pay for promised benefits when labor becomes mobile.
Keywords: earnings-related and flat-rate pensions, migration, social security, education
JEL Classification: H55, I2, F22
Suggested Citation: Suggested Citation
CESifo (Center for Economic Studies and Ifo Institute)
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IZA Institute of Labor Economics
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