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Child benefit and fiscal burden in the endogenous fertility setting

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  • Ishida, Ryo
  • Oguro, Kazumasa
  • Takahata, Junichiro

Abstract

This paper analyzes the possibility of some generations' welfare improvement via child benefit programs, without making any generation worse off, in an overlapping generations economy that has endogenous fertility and large government debt levels. We derive the conditions for this improvement using Representative-Consumer and Children-for-Representative-Consumers efficiency criteria in the endogenous fertility setting (see Michel and Wigniolle, 2007). The result crucially depends on the relative amount of accumulated government debt in the economy. When the elasticity of interest rates to child benefit is close to zero and when there exists vast accumulated debt in the economy, financing child benefit programs by issuing debt and using lump-sum tax leads to Representative-Consumer-improvements.

Suggested Citation

  • Ishida, Ryo & Oguro, Kazumasa & Takahata, Junichiro, 2015. "Child benefit and fiscal burden in the endogenous fertility setting," Economic Modelling, Elsevier, vol. 44(C), pages 252-265.
  • Handle: RePEc:eee:ecmode:v:44:y:2015:i:c:p:252-265
    DOI: 10.1016/j.econmod.2014.10.027
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    References listed on IDEAS

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    1. Mikhail Golosov & Larry E. Jones & Michèle Tertilt, 2007. "Efficiency with Endogenous Population Growth," Econometrica, Econometric Society, vol. 75(4), pages 1039-1071, July.
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    3. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
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    Cited by:

    1. Day, Creina & Guest, Ross, 2016. "Fertility and female wages: A new link via house prices," Economic Modelling, Elsevier, vol. 53(C), pages 121-132.

    More about this item

    Keywords

    Endogenous fertility; Pareto-efficiency; Child benefit; Fiscal burden;

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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