Maximum size of social security in a model of endogenous fertility
Social security tends to be unsustainable in nature. It reduces individuals'' demand for children as a measure to support their lifestyle during old age, which in turn undermines the financial basis of social security. Using a simple overlapping generations model with endogenous fertility and income transfer from children to parents, we discuss the maximum size of a pay-as-you-go social security program that can prevent a cumulative reduction of fertility and make a program sustainable. We also show that a child-care allowance raises the maximum size of the program and raises an individual''s lifetime utility.
Volume (Year): 29 (2009)
Issue (Month): 2 ()
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- Sinn, Hans-Werner, 2004.
"The pay-as-you-go pension system as fertility insurance and an enforcement device,"
Munich Reprints in Economics
938, University of Munich, Department of Economics.
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Munich Reprints in Economics
20343, University of Munich, Department of Economics.
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- Junsen Zhang & Junxi Zhang, 1998. "Social Security, Intergenerational Transfers, and Endogenous Growth," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1225-1241, November.
- Makoto Hirazawa & Akira Yakita, 2009. "Fertility, child care outside the home, and pay-as-you-go social security," Journal of Population Economics, Springer, vol. 22(3), pages 565-583, July.
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