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Are Family Allowances and Fertility-related pensions Siamese Twins?

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  • Robert Fenge
  • Volker Meier

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Abstract

This paper discusses alternative ways to deal with the positive externalities of having children in a pay-as-you-go pension system. Family allowances are compared to introducing a fertility-related component into the pension formula. In an endogenous labor supply setting, both instruments are shown to be equivalent if general pensions are of the Bismarckian contribution-related type. In contrast, if general pensions are of the Beveridgean flat-rate type, making pensions contingent on the number of children is generally preferable to family allowances because the latter creates a larger tax load on labor supply.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2004/wp-cesifo-2004-03/cesifo1_wp1157.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1157.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1157

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Keywords: pay-as-you-go pension; child benefits; fertility; externalities;

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References

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  1. 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.
  2. Namkee Ahn & Pedro Mira, . "A note on the changing relationship between fertility and female employment rates in developed countries," Studies on the Spanish Economy 13, FEDEA.
  3. Alessandro Cigno & Luca Casolaro & Furio C. Rosati, 2002. "The Impact of Social Security on Saving and Fertility in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(2), pages 189-, May.
  4. Tomas Kögel, 2004. "Did the association between fertility and female employment within OECD countries really change its sign?," Journal of Population Economics, Springer, vol. 17(1), pages 45-65, February.
  5. Alessandro Cigno & Annalisa Luporini, 2006. "Optimal Policy Towards Families with Different Amounts of Social Capital, in the Presence of Asymmetric Information and Stochastic Fertility," CESifo Working Paper Series 1664, CESifo Group Munich.
  6. Cigno, Alessandro & Rosati, Furio C., 1996. "Jointly determined saving and fertility behaviour: Theory, and estimates for Germany, Italy, UK and USA," European Economic Review, Elsevier, vol. 40(8), pages 1561-1589, November.
  7. Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer, vol. 10(3), pages 335-356.
  8. Robert Fenge & Volker Meier, 2003. "Pensions and Fertility Incentives," CESifo Working Paper Series 879, CESifo Group Munich.
  9. Bernhard Felderer & Klaus Ritzberger, 1995. "Family allowances as welfare improvements," Journal of Economics, Springer, vol. 61(1), pages 11-33, February.
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Cited by:
  1. Jellal, Mohamed & Bouzahzah, Mohamed, 2012. "Social security family finance and demography," MPRA Paper 38804, University Library of Munich, Germany.
  2. 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.
  3. Francesco C. Billari, 2009. "What explains fertility? Evidence from Italian pension reforms," 2009 Meeting Papers 807, Society for Economic Dynamics.
  4. Martin Werding, 2006. "Kinderrente und Vorsorgepflicht - der ifo-Vorschlag zur Lösung der demographischen Krise des Rentensystems," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 59(07), pages 44-53, 04.
  5. Volker Meier & Matthias Wrede, 2005. "Pension, Fertility, and Education," CESifo Working Paper Series 1521, CESifo Group Munich.
  6. repec:ebl:ecbull:v:10:y:2008:i:8:p:1-7 is not listed on IDEAS
  7. 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.

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