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Optimal social security in a dynastic model with investment externalities and endogenous fertility

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  • Zhang, Jie
  • Zhang, Junsen

Abstract

This paper studies optimal pay-as-you-go social security with positive bequests and endogenous fertility. With an investment externality, a competitive solution without social security su?ers from under-investment in capital and over-reproduction of population. We show that social security can improve welfare by reducing fertility and increasing capital intensity. We also illustrate numerically that a small degree of this externality is enough to justify the observed high ratios of social security spending to GDP.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 31 (2007)
Issue (Month): 11 (November)
Pages: 3545-3567

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Handle: RePEc:eee:dyncon:v:31:y:2007:i:11:p:3545-3567

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Web page: http://www.elsevier.com/locate/jedc

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References

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Citations

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Cited by:
  1. Michele Tertilt, 2010. "Who Owns Children and Does it Matter?," Discussion Papers 09-003, Stanford Institute for Economic Policy Research.
  2. Yew, Siew Ling & Zhang, Jie, 2009. "Optimal social security in a dynastic model with human capital externalities, fertility and endogenous growth," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 605-619, April.
  3. Akira Momota & Ryo Horii, 2013. "Timing of childbirth, capital accumulation, and economic welfare," Oxford Economic Papers, Oxford University Press, vol. 65(2), pages 494-522, April.
  4. repec:hal:cesptp:halshs-00275751 is not listed on IDEAS
  5. Yasuoka, Masaya & Miyake, Atsushi, 2012. "Public debt, child allowances, and pension benefits with endogenous fertility," Economics Discussion Papers 2012-47, Kiel Institute for the World Economy.
  6. Schoonbroodt, Alice & Tertilt, Michèle, 2014. "Property rights and efficiency in OLG models with endogenous fertility," Journal of Economic Theory, Elsevier, vol. 150(C), pages 551-582.
  7. Thomas Baudin, 2011. "Family Policies: What Does the Standard Endogenous Fertility Model Tell Us?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(4), pages 555-593, 08.
  8. Richard C. Barnett & Joydeep Bhattacharya & Mikko Puhakka, 2012. "Private versus Public Old-Age Security," DEGIT Conference Papers c017_043, DEGIT, Dynamics, Economic Growth, and International Trade.
  9. repec:hal:journl:halshs-00275751 is not listed on IDEAS
  10. Yew, Siew Ling & Zhang, Jie, 2013. "Socially optimal social security and education subsidization in a dynastic model with human capital externalities, fertility and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 154-175.

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