Pension Systems and their Influence on Fertility and Growth
AbstractThis paper studies the implications of di¤erent public pension systems on fertility and economic growth. Employing a three period overlapping gener- ations endogenous growth model we compare the di¤erent impacts of pay-as- you-go-, fully funded- and informal pension systems. The novelty of our work lies in the formulation of altruism that is assumed to be one sided (descending) for economies represented by a public pension system and two sided (descend- ing and ascending) for economies with informal pension systems. Through the incorporation of a mixed procreation motive we can study the case of fully crowded out intrafamilial transfers inside a public pension system model while still capturing fertility endogenously. We show that the introduction of public pension systems to a developing economy reduce fertility and stimulate economic growth. Through a comparison of the di¤erent public pension systems we highlight that a fully funded pension system results in higher economic growth compared to a pay-as-you-go one despite higher fertility because the growth enhancing e¤ect of the higher capital stock is dominant. This suggests that observed fertility and growth di¤erences between the US and Europe can partly be explained by the di¤erent types of pension systems.
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 University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0704.
Date of creation: Jun 2007
Date of revision:
Contact details of provider:
Web page: http://www.univie.ac.at/vwl
Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
- 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-2007-08-14 (Economics of Ageing)
- NEP-ALL-2007-08-14 (All new papers)
- NEP-DGE-2007-08-14 (Dynamic General Equilibrium)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- World Bank, 2006. "Africa Development Indicators 2006," World Bank Publications, The World Bank, number 12421.
- DE LA CROIX, David & DOEPKE, Matthias, 2001.
"Inequality and Growth : Why Differential Fertility Matters,"
Discussion Papers (IRES - Institut de Recherches Economiques et Sociales)
2001008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- David de la Croix & Matthias Doepke, 2003. "Inequality and Growth: Why Differential Fertility Matters," American Economic Review, American Economic Association, vol. 93(4), pages 1091-1113, September.
- DE LA CROIX, David & DOEPKE, Matthias, . "Inequality and growth: why differential fertility matters," CORE Discussion Papers RP -1676, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- David de la Croix & Matthias Doepke, 2001. "Inequality and Growth: Why Differential Fertility Matters," UCLA Economics Working Papers 803, UCLA Department of Economics.
- Gary S. Becker & Robert J. Barro, .
"A Reformulation of the Economic Theory of Fertility,"
University of Chicago - Population Research Center
85-11, Chicago - Population Research Center.
- Becker, Gary S & Barro, Robert J, 1988. "A Reformulation of the Economic Theory of Fertility," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 1-25, February.
- Gary S. Becker & Robert J. Barro, 1988. "A Reformulation of the Economic Theory of Fertility," NBER Working Papers 1793, National Bureau of Economic Research, Inc.
- Michele Boldrin & Mariacristina De Nardi & Larry E. Jones, 2005.
"Fertility and Social Security,"
NBER Working Papers
11146, National Bureau of Economic Research, Inc.
- Michele Boldrin & Mariacristina De Nardi & Larry E. Jones, 2005. "Fertility and Social Security," Staff Report 359, Federal Reserve Bank of Minneapolis.
- Michele Boldrin & Maria Cristina De Nardi & Larry E. Jones, 2005. "Fertility and Social Security," Levine's Bibliography 666156000000000506, UCLA Department of Economics.
- Martin Feldstein & Andrew Samwick, 1998.
"The Transition Path in Privatizing Social Security,"
in: Privatizing Social Security, pages 215-264
National Bureau of Economic Research, Inc.
- Martin Feldstein & Andrew Samwick, 1996. "The Transition Path in Privatizing Social Security," NBER Working Papers 5761, National Bureau of Economic Research, Inc.
- David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
- Morand, Olivier F, 1999. " Endogenous Fertility, Income Distribution, and Growth," Journal of Economic Growth, Springer, vol. 4(3), pages 331-49, September.
- Berthold U. Wigger, 1999. "Pay-as-you-go financed public pensions in a model of endogenous growth and fertility," Journal of Population Economics, Springer, vol. 12(4), pages 625-640.
- Zhang, Junsen & Nishimura, Kazuo, 1993. "The old-age security hypothesis revisited," Journal of Development Economics, Elsevier, vol. 41(1), pages 191-202, June.
- Noriyuki Yanagawa & Gene M. Grossman, 1992.
"Asset Bubbles and Endogenous Growth,"
NBER Working Papers
4004, National Bureau of Economic Research, Inc.
- Yoon, Yeopil & Talmain, Gabriel, 2001. "Endogenous Fertility, Endogenous Growth and Public Pension System: Should We Switch from a Pay-As-You-Go to a Fully Funded System?," Manchester School, University of Manchester, vol. 69(5), pages 586-605, Special I.
- Zhang, Jie, 1995. "Social security and endogenous growth," Journal of Public Economics, Elsevier, vol. 58(2), pages 185-213, October.
- Yeopil Yoon & Gabriel Talmain, . "Endogenous Fertility, Endogenous Growth and Public Pension System: Should We Switch from a PAYG to a Fully-Funded System?," Discussion Papers 00/31, Department of Economics, University of York.
- Bental, Benjamin, 1989. "The Old Age Security Hypothesis and Optimal Population Growth," Journal of Population Economics, Springer, vol. 1(4), pages 285-301.
- Johannes Holler, 2008. "On the Role of Pension Systems in Economic Development and Demographic Transition," Vienna Economics Papers 0812, University of Vienna, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paper Administrator).
If references are entirely missing, you can add them using this form.