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On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting

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Author Info
G. Abio ()
Geraldine Mahieu ()
Cio Patxot ()

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Abstract

In order to help in designing an accurate pension reform, we determine the resource allocation in an endogenous fertility model that generates an endogenous demographic transition by means of distinguishing between female and male labor. We analyze the problem of the optimal solution and characterize the decentralization of the first best. We show that a pension policy linking pension benefits to the number of children acts as a corrective tax system able to restore both the optimal capital stock and the optimal rate of population growth as a single instrument. We also show that neither a Beveridgean pension scheme nor a Bismarckian one can decentralize the first best.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1050.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1050

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Related research
Keywords: demographic transition; endogenous fertility; pay-as-you-go pension system; golden rule;

Other versions of this item:

Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Oded Galor & David N. Weil, 1993. "The Gender Gap, Fertility, and Growth," NBER Working Papers 4550, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Michel, Philippe & Pestieau, P, 1993. "Population Growth and Optimality: When Does Serendipity Hold?," Journal of Population Economics, Springer, vol. 6(4), pages 353-62, November.
  3. Kolmar, Martin, 2001. " Optimal Intergenerational Redistribution in a Two-Country Model with Endogenous Fertility," Public Choice, Springer, vol. 106(1-2), pages 23-51, January. [Downloadable!] (restricted)
  4. Deardorff, Alan V, 1976. "The Optimum Growth Rate for Population: Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 510-15, June. [Downloadable!] (restricted)
  5. Bental, Benjamin, 1989. "The Old Age Security Hypothesis and Optimal Population Growth," Journal of Population Economics, Springer, vol. 1(4), pages 285-301.
  6. Galor, Oded & Weil, David, 1998. "Population, Technology and Growth: From the Malthusian Regime to the Demographic Transition," CEPR Discussion Papers 1981, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Atkinson, A B & Sandmo, A, 1980. "Welfare Implications of the Taxation of Savings," Economic Journal, Royal Economic Society, vol. 90(359), pages 529-49, September. [Downloadable!] (restricted)
  8. Samuelson, Paul A, 1976. "The Optimum Growth Rate for Population: Agreement and Evaluations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 516-25, June. [Downloadable!] (restricted)
  9. Schweizer, Urs, 1996. "Endogenous fertility and the Henry George Theorem," Journal of Public Economics, Elsevier, vol. 61(2), pages 209-228, August. [Downloadable!] (restricted)
  10. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June. [Downloadable!] (restricted)
  11. Gary S. Becker & Kevin M. Murphy & Robert Tamura, . "Human Capital, Fertility, and Economic Growth," University of Chicago - Population Research Center 90-5a, Chicago - Population Research Center. [Downloadable!]
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  12. Claire Loupias & Bertrand Wigniolle, 2004. "Régime de retraite et chute de natalité : évolution des moeurs ou arbitrage micro-économique," Annales d'Economie et de Statistique, ADRES, issue 73, pages 04, Janvier-M. [Downloadable!]
  13. Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer, vol. 10(3), pages 335-356. [Downloadable!] (restricted)
  14. Samuelson, Paul A, 1975. "The Optimum Growth Rate for Population," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 531-38, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Helmuth Cremer & Firouz Gahvari & Pierre Pestieau, 2008. "Pensions with heterogenous individuals and endogenous fertility," Journal of Population Economics, Springer, vol. 21(4), pages 961-981, October. [Downloadable!] (restricted)
    Other versions:
  2. Klaus Jaeger & Wolfgang Kuhle, 2009. "The optimum growth rate for population reconsidered," Journal of Population Economics, Springer, vol. 22(1), pages 23-41, January. [Downloadable!] (restricted)
  3. Bas Groezen & Lex Meijdam, 2008. "Growing old and staying young: population policy in an ageing closed economy," Journal of Population Economics, Springer, vol. 21(3), pages 573-588, July. [Downloadable!] (restricted)
    Other versions:
  4. Luciano Fanti & Luca Gori, 2008. "Fertility-related pensions and fertility disincentives," Economics Bulletin, Economics Bulletin, vol. 10(8), pages 1-7. [Downloadable!]
  5. Luciano Fanti & Luca Gori, 2008. "Child quality choice and fertility disincentives," Economics Bulletin, Economics Bulletin, vol. 10(7), pages 1-6. [Downloadable!]
  6. Robert Fenge & Volker Meier, 2003. "Pensions and Fertility Incentives," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  7. Luciano Fanti & Luca Gori, 2008. "Human capital, income, fertility and child policy," Economics Bulletin, Economics Bulletin, vol. 9(7), pages 1-7. [Downloadable!]
  8. Galasso, Vincenzo & Gatti, Roberta & Profeta, Paola, 2008. "Investing for the Old Age: Pensions, Children and Savings," CEPR Discussion Papers 6825, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Helmuth Cremer & Firouz Gahvari & Pierre Pestieau, 2003. "Stochastic fertility, moral hazard, and the design of pay-as-you-go pension plans," DELTA Working Papers 2003-21, DELTA (Ecole normale supérieure). [Downloadable!]
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