PAYG pensions and fertility drop: some (pleasant) arithmetic
AbstractThis paper explores whether the common belief that the currently observed fertility drop is a threat (or, conversely, the invoked fertility recovery is beneficial) for PAYG pensions is really always validated by the basic accounting of the PAYG pension budget. It is shown, through a simple arithmetic, that, rather surprisingly, in the long run a fertility drop may be beneficial, while, conversely, a fertility recovery may be harmful for pensions, under rather realistic conditions as regards both fertility changes and time costs of childrearing. Furthermore, this result also holds a fortiori in the short run.
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Bibliographic InfoPaper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2012/146.
Date of creation: 01 Sep 2012
Date of revision:
PAYG pension; OLG model.;
Find related papers by JEL classification:
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-AGE-2012-11-03 (Economics of Ageing)
- NEP-ALL-2012-11-03 (All new papers)
- NEP-DEM-2012-11-03 (Demographic Economics)
- NEP-DGE-2012-11-03 (Dynamic General Equilibrium)
- NEP-LMA-2012-11-03 (Labor Markets - Supply, Demand, & Wages)
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