Impact of Privatization of Retirement Systems

Abstract

Changes in the social security system have an impact on the rest of the economy. The most direct effects would be in the labor market. Increases in social security benefits usually involve raising taxes. Taxes take the form of a payroll tax. Therefore, the most common method of assessing the (first round) effects of social security is to analyze the impact on the labor market. In the first section, we study two aspects of the effects of social security on labor markets. First, we survey the literature of the effects of pay as you go systems on labor markets, and second, the privatization of social security and its impact on the labor market.