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Endogenous Fertility, Externalities, and Efficiency in Old-Age Pension Systems

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  • Ludwig von Auer
  • Bettina Büttner

Abstract

Due to falling fertility and rising life expectancies, a serious financial crisis is looming over the pay-as-you-go pension systems established in many developed countries. The present study demonstrates that falling fertility can partly be explained by the fiscal externalities arising from the bad design of established pay-as-you-go pension systems. It is shown that these externalities also arise in ill-designed funded systems and that for both types of pension systems one can construct variants that internalize these externalities and result in a Pareto improvement.

Suggested Citation

  • Ludwig von Auer & Bettina Büttner, 2004. "Endogenous Fertility, Externalities, and Efficiency in Old-Age Pension Systems," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(2), pages 294-310, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200406)160:2_294:efeaei_2.0.tx_2-s
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    References listed on IDEAS

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    Cited by:

    1. Robert Fenge & Beatrice Scheubel, 2017. "Pensions and fertility: back to the roots," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 93-139, January.
    2. Richard C. Barnett & Joydeep Bhattacharya & Mikko Puhakka, 2018. "Private versus public old-age security," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(3), pages 703-746, July.
    3. Robert Stelter, 2016. "Fertility and health insurance types in Germany," LIDAM Discussion Papers IRES 2016021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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