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Fertility and PAYG pensions in the overlapping generations model

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  • Fanti, Luciano
  • Gori, Luca

Abstract

This article analyses how long-run pay-as-you-go public pensions react to a change in fertility in the basic overlapping generations model of neoclassical growth. While it would seem well established both in the academic and political debates that the decline in fertility represents a “demographic time bomb” for the sustainability of public pensions, it is shown that a falling birth rate need not necessarily cause long-run pension benefit to fall.

Suggested Citation

  • Fanti, Luciano & Gori, Luca, 2010. "Fertility and PAYG pensions in the overlapping generations model," MPRA Paper 25811, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:25811
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    References listed on IDEAS

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    1. Robert Fenge & Jakob Weizsäcker, 2010. "Mixing Bismarck and child pension systems: an optimum taxation approach," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(2), pages 805-823, March.
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    6. Fanti, Luciano & Gori, Luca, 2010. "Increasing PAYG pension benefits and reducing contribution rates," Economics Letters, Elsevier, vol. 107(2), pages 81-84, May.
    7. Alessandro Cigno, 2007. "Low fertility in Europe: Is the pension system the victim or the culprit? Introduction by Alessandro Cigno," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(03), pages 37-42, October.
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    More about this item

    Keywords

    Fertility; PAYG pensions; OLG model;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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