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The Impact of Social Security on Saving and Fertility in Germany

Author

Listed:
  • Alessandro Cigno
  • Luca Casolaro
  • Furio C. Rosati

Abstract

Estimating saving and fertility simultaneously by the VAR method, we find that social security coverage has a positive effect on household saving, and a negative effect on fertility. In Germany, as in other countries where the hypothesis was tested, social security is thus good for growth. A possible explanation for this unconventional finding is that compulsory saving in the form of pension contributions tends to displace intrafamily transfers, rather than conventional asset formation. However, the negative effect of social security on fertility tends to erode the system's own contributory base, because it reduces the number of future contributors. That is one of the reasons why, in Germany as elsewhere, the pay-as-you-go pension system is financially brittle. To some extent, that is counteracted by child-related benefits, which tend to encourage fertility, but some retrenchment on the pension front appears to be unavoidable.

Suggested Citation

  • Alessandro Cigno & Luca Casolaro & Furio C. Rosati, 2002. "The Impact of Social Security on Saving and Fertility in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(2), pages 189-189, May.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(2002/200305)59:2_189:tiosso_2.0.tx_2-r
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    Citations

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    Cited by:

    1. Helmut Rainer & Geethanjali Selvaretnam & David Ulph, 2011. "Assisted reproductive technologies (ART) in a model of fertility choice," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(3), pages 1101-1132, July.
    2. Meier, Volker & Wrede, Matthias, 2010. "Pensions, fertility, and education," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(01), pages 75-93, January.
    3. Timo Hener, 2010. "Do Couples Bargain over Fertility?: Evidence Based on Child Preference Data," SOEPpapers on Multidisciplinary Panel Data Research 323, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Cigno, Alessandro, 2008. "Is there a social security tax wedge," Labour Economics, Elsevier, vol. 15(1), pages 68-77, February.
    5. Alessandro Cigno, 2007. "Low fertility in Europe: Is the pension system the victim or the culprit? Introduction by Alessandro Cigno," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(3), pages 37-42, October.
    6. Robert Fenge & Volker Meier, 2004. "Are Family Allowances and Fertility-related pensions Siamese Twins?," CESifo Working Paper Series 1157, CESifo Group Munich.
    7. Carsten Schröder, 2008. "Cigno, A. and Werding, M.: Children and Pensions," Journal of Economics, Springer, vol. 95(1), pages 87-91, October.
    8. Alessandro Cigno, 2010. "How to Avoid a Pension Crisis: A Question of Intelligent System Design ," CESifo Economic Studies, CESifo, vol. 56(1), pages 21-37, March.
    9. Alessandro Cigno & Gianna Giannelli & Furio Rosati & Daniela Vuri, 2006. "Is there such a thing as a family constitution? A test based on credit rationing," Review of Economics of the Household, Springer, vol. 4(3), pages 183-204, September.
    10. Michael Voigtländer, 2005. "Qualitative und quantitative Aspekte einer Elternrente?," List Forum Chapter,in: List Forum Band 31, edition 1, volume 3, chapter 13, pages 215-230 List Gesellschaft e.V..
    11. Robert Fenge & Volker Meier, 2009. "Are family allowances and fertility-related pensions perfect substitutes?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(2), pages 137-163, April.
    12. Vincenzo Galasso & Roberta Gatti & Paola Profeta, 2009. "Investing for the old age: pensions, children and savings," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 538-559, August.
    13. Bas Groezen & Lex Meijdam, 2008. "Growing old and staying young: population policy in an ageing closed economy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(3), pages 573-588, July.
    14. Robert Fenge & Jakob Weizsäcker, 2010. "Mixing Bismarck and child pension systems: an optimum taxation approach," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(2), pages 805-823, March.
    15. James Obben & Monique Waayer, 2011. "New Zealand's old-age pension scheme and household saving," International Journal of Social Economics, Emerald Group Publishing, vol. 38(9), pages 767-788, August.
    16. Gaggermeier, Christian, 2006. "Pension and children : Pareto improvement with heterogeneous preferences," IAB Discussion Paper 200603, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • 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
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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