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The Costs of Increasing the Fertility Rate in an Endogenous Growth Model

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  • Stauvermann, Peter J.
  • Ky, Sereyvath
  • Nam, Gi-Yu
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    Abstract

    In this paper, we apply an Overlapping Generations (OLG) model with endogenous fertility and a pay as you go (PAYG) pension system to find out what are the economic consequences of different policy measures to increase the number of children. Especially, we take into account the introduction of a child dependent PAYG pension system, child allowances financed by a labor income tax, and a reduction of the child rearing costs. Some authors have shown that in small open economies with exogenous growth it is possible to increase the fertility without harming any generation. Here we show that this is impossible in a model with endogenous growth.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46381.

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    Date of creation: Jan 2013
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    Handle: RePEc:pra:mprapa:46381

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    Keywords: Fertility; endogenous growth; pay-as-you-go pension; child allowances;

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    1. van Groezen, Bas & Leers, Theo & Meijdam, Lex, 2003. "Social security and endogenous fertility: pensions and child allowances as siamese twins," Journal of Public Economics, Elsevier, vol. 87(2), pages 233-251, February.
    2. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
    3. Fenge, Robert & Meier, Volker, 2009. "Are family allowances and fertility-related pensions perfect substitutes?," Munich Reprints in Economics 20340, University of Munich, Department of Economics.
    4. Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer, vol. 10(3), pages 335-356.
    5. Fenge, Robert & Meier, Volker, 2005. "Pensions and Fertility Incentives," Munich Reprints in Economics 20343, University of Munich, Department of Economics.
    6. repec:ebl:ecbull:v:10:y:2008:i:8:p:1-7 is not listed on IDEAS
    7. Tarjei Havnes & Magne Mogstad, 2009. "No Child Left Behind. Universal Child Care and Children’s Long-Run Outcomes," Discussion Papers 582, Research Department of Statistics Norway.
    8. Yang Zaigui, 2005. "Pay-As-You-Go Public Pension Systems: Two-sided Altruism and Endogenous Growth," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 1(1), pages 1-13, June.
    9. Luca Gori & Luciano Fanti, 2008. "Fertility-related pensions and fertility disincentives," Economics Bulletin, AccessEcon, vol. 10(8), pages 1-7.
    10. Irmen, Andreas & Wigger, Berthold, 2002. "National Minimum Wages, Capital Mobility and Global Economic Growth," CEPR Discussion Papers 3286, C.E.P.R. Discussion Papers.
    11. Yang, Zaigui, 2007. "Partially Funded Pension, Fertility and Endogenous Growth," MPRA Paper 18681, University Library of Munich, Germany.
    12. Ab O, G. & Mahieu, G. & Patxot, C., 2004. "On the optimality of PAYG pension systems in an endogenous fertility setting," Journal of Pension Economics and Finance, Cambridge University Press, vol. 3(01), pages 35-62, March.
    13. Fanti, Luciano & Gori, Luca, 2010. "PAYG pensions, tax-cum-subsidy and optimality," MPRA Paper 20219, University Library of Munich, Germany.
    14. Dimitrios Varvarigos & Intan Zanariah Zakaria, 2010. "Endogenous Fertility in a Growth Model with Public and Private Health Expenditures," Discussion Papers in Economics 11/07, Department of Economics, University of Leicester.
    15. Fanti, Luciano & Gori, Luca, 2010. "Economic growth and stability with public PAYG pensions and private intra-family old-age insurance," MPRA Paper 20727, University Library of Munich, Germany.
    16. Dimitrios Varvarigos & Intan Zakaria, 2013. "Endogenous fertility in a growth model with public and private health expenditures," Journal of Population Economics, Springer, vol. 26(1), pages 67-85, January.
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