We explore the far-reaching implications of low-wage subsidies on aggregate employment. Low-wage subsidies have three important effects. First, they promote employment of unskilled workers (who tend to be the ones who earn low wages). Second, by raising the payoff of unskilled work relative to...

While the effect of social security systems on retirement decisions has received much attention, the impact of these systems on individuals' incentives to invest in their human capital has not been analyzed. We integrate human capital investment and retirement decisions in a simple analytical...