Sustainability of social security in a model of endogenous fertility
AbstractSocial security tends to be unsustainable in nature in that it reduces individuals' demand for children as a measure to support their old age, which in turn undermines the financial base of social security. Using a simple overlapping-generations model with endogenous fertility and income transfer from children to parents, we discuss the maximum size of a pay-as-you-go social security program that can prevent a cumulative reduction of fertility and make the program sustainable. We also show that childcare allowance raises the maximum size of the program and raises an individual's lifetime utility.
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Bibliographic InfoPaper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series PIE/CIS Discussion Paper with number 450.
Length: 25 p.
Date of creation: Aug 2009
Date of revision:
social security; fertility; intergenerational income transfer;
Find related papers by JEL classification:
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-11-21 (Economics of Ageing)
- NEP-ALL-2009-11-21 (All new papers)
- NEP-DGE-2009-11-21 (Dynamic General Equilibrium)
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