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

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  • Zhang, Jie
  • Zhang, Junsen

Abstract

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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  • Zhang, Jie & Zhang, Junsen, 2007. "Optimal social security in a dynastic model with investment externalities and endogenous fertility," Journal of Economic Dynamics and Control, Elsevier, vol. 31(11), pages 3545-3567, November.
  • Handle: RePEc:eee:dyncon:v:31:y:2007:i:11:p:3545-3567
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    Citations

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    Cited by:

    1. Thomas Baudin, 2011. "Family Policies: What Does the Standard Endogenous Fertility Model Tell Us?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(4), pages 555-593, August.
    2. Yasuoka, Masaya & Miyake, Atsushi, 2013. "Public debt, child allowances and pension benefits with endogenous fertility," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-25.
    3. Alice Schoonbroodt & Michele Tertilt, 2010. "Who Owns Children and Does It Matter?," Working Papers id:2360, eSocialSciences.
    4. Barnett, Richard & Bhattacharya, Joydeep & Puhakka, Mikko, 2012. "Private Versus Public Old-Age Security," School of Economics Working Paper Series 2012-14, LeBow College of Business, Drexel University.
    5. Akira Momota & Ryo Horii, 2013. "Timing of childbirth, capital accumulation, and economic welfare," Oxford Economic Papers, Oxford University Press, vol. 65(2), pages 494-522, April.
    6. 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.
    7. Schoonbroodt, Alice & Tertilt, Michèle, 2014. "Property rights and efficiency in OLG models with endogenous fertility," Journal of Economic Theory, Elsevier, vol. 150(C), pages 551-582.
    8. Masatoshi Jinno & Masaya Yasuoka, 2016. "Are the social security benefits of pensions or child-care policies best financed by a consumption tax?," Business and Economic Horizons (BEH), Prague Development Center, vol. 12(3), pages 94-112, September.
    9. repec:hal:journl:halshs-00275751 is not listed on IDEAS
    10. 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.

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