The Old Age Security Hypothesis and Population Growth
AbstractIn traditional societies it is often argued that parents' desire for old age security in the form of transfers from their children provides an important motive for childbearing. Some doubt has been cast on this "old age security hypothesis" by recent estimates which suggest that the rate of return on investments in children tend to be negative in most developing countries. This paper presents a theoretical model which integrates micro-level decision making about fertility and life cycle consumption into a dynamic macro-level model of overlapping generations in order to investigate the implications of this hypothesis. In this model, observation of a negative rate of return to children and positive population growth in a traditional society may imply (1) that the old age security motive for childbearing is, in fact, very strong; (2) that the rate of population growth is "too high" from a Paretian point of view; and (3) that each individual in current and all future generations could be made better off if the rate of population growth were lower and the level of old age consumption were increased, but that a reduction in population growth alone would reduce welfare. A social security tax and transfer policy could be devised to induce a Pareto optimal rate of population growth and distribution of life cycle consumption only if measures are taken to offset the divergence between the private and social rate of return to children created by the social security scheme.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0372.
Date of creation: Jul 1979
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Sinn, Hans-Werner, 1998.
"The Pay-As You-Go Pension System as a Fertility Insurance and Enforcement Device,"
CEPR Discussion Papers
2023, C.E.P.R. Discussion Papers.
- Hans-Werner Sinn, 1998. "The Pay-As-You-Go Pension System as a Fertility Insurance and Enforcement Device," NBER Working Papers 6610, National Bureau of Economic Research, Inc.
- David N. Weil, 1999. "Population Growth, Dependency, and Consumption," American Economic Review, American Economic Association, vol. 89(2), pages 251-255, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.