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A Study on Financial Deficit and Declining Birthrate - From the Viewpoint of "Children as a Social Security Revenue Source" -

Author

Listed:
  • Kazumasa Oguro

    (Research Fellow, Institute for International Policy Studies)

  • Shoichiro Yuyama

    (Former Planning Chief for International Affairs, Policy Research Institute, Ministry of Finance, Japan)

Abstract

While social security systems in the developed countries including Japan are taking pay-as-you-go system based on the cooperation between generations, the fertility number as a tax base of social security is decreasing and the low fertility tendency is common in the developed countries. And if each generation behaves with considering life-cycle and chooses the fertility level rationally, it is considered that there is a possibility that the existence of coverage for social security by fiscal deficit may affect the fertility to some extent. Hence, in this paper, if regarding children as a tax base of social security, we consider the following analysis; 1) from a macro viewpoint, by constructing a dynamic overlapping generation model, how the coverage for social security by fiscal deficit affects on fertility, 2) from a micro viewpoint, in case that there is no relationship between social security transfer and fertility of each household, how the fertility number in the whole economy affects. As a result, to 1), we get an implication that there is a possibility fiscal deficit may affect negatively on fertility from the time series analysis with using 17 countries panel data. Moreover, to 2), from a micro viewpoint, by simplified Nash equilibrium game, in case that there is no relationship between social security benefit and fertility number, there is a negative impact as compared to a social optimal fertility level. In this paper, it is shown that, if children are regarded as a tax base, in order to avoid the negative relationship, it is necessary to consider the following policies; 1) the coverage for social security by fiscal deficit should be set to zero, 2) and a system such that the payment schedule is depending on the number of household children should be introduced, considering the balance of benefit and burden.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Kazumasa Oguro & Shoichiro Yuyama, 2008. "A Study on Financial Deficit and Declining Birthrate - From the Viewpoint of "Children as a Social Security Revenue Source" -," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 4(1), pages 53-76, December.
  • Handle: RePEc:mof:journl:ppr004c
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    References listed on IDEAS

    as
    1. Rosenzweig, Mark R. & Paul Schultz, T., 1987. "Fertility and investments in human capital : Estimates of the consequence of imperfect fertility control in Malaysia," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 163-184.
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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H4 - Public Economics - - Publicly Provided Goods
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J1 - Labor and Demographic Economics - - Demographic Economics

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