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Optimal social security in a dynastic model with investment externalities and endogenous fertility

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This paper studies optimal pay-as-you-go social security with positive bequests and endogenous fertility. With an investment externality, a competitive solution without social security su?ers from under-investment in capital and over-reproduction of population. We show that social security can improve welfare by reducing fertility and increasing capital intensity. We also illustrate numerically that a small degree of this externality is enough to justify the observed high ratios of social security spending to GDP.

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File URL: http://www.uq.edu.au/economics/mrg/1006.pdf
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Paper provided by School of Economics, University of Queensland, Australia in its series MRG Discussion Paper Series with number 1006.

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Handle: RePEc:qld:uqmrg6:10

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Cited by:
  1. Yew, Siew Ling & Zhang, Jie, 2013. "Socially optimal social security and education subsidization in a dynastic model with human capital externalities, fertility and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 154-175.
  2. Thomas Baudin, 2008. "Family policies : what does the standard endogenous fertility model tell us ?," Documents de travail du Centre d'Economie de la Sorbonne v08029, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  3. Momota, Akira & Horii, Ryo, 2011. "Timing of childbirth, capital accumulation, and economic welfare," MPRA Paper 34088, University Library of Munich, Germany.
  4. Schoonbroodt, Alice & Tertilt, Michele, 2010. "Property rights and efficiency in OLG models with endogenous fertility," Discussion Paper Series In Economics And Econometrics 1020, Economics Division, School of Social Sciences, University of Southampton.
  5. Barnett, Richard C. & Bhattacharya, Joydeep & Puhakka, Mikko, 2012. "Private versus public old-age security," Staff General Research Papers 35442, Iowa State University, Department of Economics.
  6. Yasuoka, Masaya & Miyake, Atsushi, 2012. "Public debt, child allowances, and pension benefits with endogenous fertility," Economics Discussion Papers 2012-47, Kiel Institute for the World Economy.
  7. Schoonbroodt, Alice & Tertilt, Michèle, 2010. "Who Owns Children and Does it Matter?," CEPR Discussion Papers 7653, C.E.P.R. Discussion Papers.
  8. Yew, Siew Ling & Zhang, Jie, 2009. "Optimal social security in a dynastic model with human capital externalities, fertility and endogenous growth," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 605-619, April.
  9. repec:hal:journl:halshs-00275751 is not listed on IDEAS

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