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How to Avoid a Pension Crisis: A Question of Intelligent System Design

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  • Alessandro Cigno

Abstract

Conventional pension systems suffer from a design defect, which makes them financially unsustainable, and a source of inefficiency for the economy as a whole. The article outlines a second-best policy which includes a public pension system made up of two parallel schemes, a Bismarckian one allowing individuals to qualify for a pension by working and paying contributions in the usual way, and an unconventional one allowing them to qualify for a pension by having children, and investing time and money in their upbringing. (JEL codes: D13, D64, H55, J13, J14 and J26) Copyright The Author 2009. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Alessandro Cigno, 2010. "How to Avoid a Pension Crisis: A Question of Intelligent System Design ," CESifo Economic Studies, CESifo Group, vol. 56(1), pages 21-37, March.
    • Handle: RePEc:oup:cesifo:v:56:y:2010:i:1:p:21-37
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifp024
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Saving pensions with conditional benefits
      by Economic Logician in Economic Logic on 2010-05-12 19:15:00

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    Cited by:

    1. Gilles Le Garrec, 2015. "Increased longevity and social security reform: questioning the optimality of individual accounts when education matters," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(2), pages 329-352, April.
    2. Cigno, A., 2016. "Conflict and Cooperation Within the Family, and Between the State and the Family, in the Provision of Old-Age Security," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 609-660, Elsevier.
    3. Li, Shiyu & Lin, Shuanglin, 2016. "Population aging and China's social security reforms," Journal of Policy Modeling, Elsevier, vol. 38(1), pages 65-95.
    4. Tim Buyse, 2014. "Pensions and fertility: a simple proposal for reform," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/888, Ghent University, Faculty of Economics and Business Administration.
    5. Cheng Yuan & Chengjian Li & Lauren A. Johnston, 2018. "The intergenerational education spillovers of pension reform in China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(3), pages 671-701, July.
    6. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 529-564, April.
    7. Jesús J. Sánchez-Barricarte, 2017. "The long-term determinants of marital fertility in the developed world (19th and 20th centuries): The role of welfare policies," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 36(42), pages 1255-1298.
    8. Giam Cipriani, 2014. "Population aging and PAYG pensions in the OLG model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(1), pages 251-256, January.
    9. Renaat Van de Kerckhove & Freddy Heylen & Tim Buyse, 2011. "Pension reform, employment by age, and long-run growth in OECD countries," 2011 Meeting Papers 736, Society for Economic Dynamics.
    10. Luciano Fanti & Luca Gori, 2013. "Fertility-related pensions and cyclical instability," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1209-1232, July.
    11. Mat Salleh, Supian & Halid, Noreha, 2018. "Human Capital, Intrinsic Motivation and Poverty of Elderly in Later Life," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 157-168.
    12. Szegő, Szilvia, 2011. "Pensions containing allowance paid by children – why and how?," Public Finance Quarterly, Corvinus University of Budapest, vol. 56(4), pages 429-445.
    13. Tim Buyse & Freddy Heylen & Renaat Van de Kerckhove, 2013. "Pension reform, employment by age, and long-run growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 769-809, April.
    14. Maciej Lis, 2017. "Productivity based selection to retirement: Evidence from EU-SILC," IBS Working Papers 02/2017, Instytut Badan Strukturalnych.
    15. 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.
    16. Songbiao Zhang & Xining Wang & Huajin Li & Huilin Wang, 2023. "The geographical pension gap: Understanding the causes of inequality in China’s pension funds," PLOS ONE, Public Library of Science, vol. 18(7), pages 1-17, July.
    17. Koichi Miyazaki, 2013. "Pay-as-you-go social security and endogenous fertility in a neoclassical growth model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1233-1250, July.
    18. Alessandro Cigno & Annalisa Luporini, 2011. "Optimal Family Policy in the Presence of Moral Hazard when the Quantity and Quality of Children are Stochastic," CESifo Economic Studies, CESifo Group, vol. 57(2), pages 349-364, June.
    19. Gurgen Aslanyan, 2014. "The migration challenge for PAYG," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(4), pages 1023-1038, October.
    20. Shiyu Li & Shuanglin Lin, 2024. "Social security reforms, capital accumulation, and welfare: A notional defined contribution system vs a modified PAYG system," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(1), pages 1-34, March.
    21. Cipriani, Giam Pietro & Fioroni, Tamara, 2022. "Social security and endogenous demographic change: child support and retirement policies," Journal of Pension Economics and Finance, Cambridge University Press, vol. 21(3), pages 307-325, July.
    22. Cipriani, Giam Pietro & Fioroni, Tamara, 2024. "Human capital and pensions with endogenous fertility and retirement," Macroeconomic Dynamics, Cambridge University Press, vol. 28(2), pages 478-494, March.
    23. Peter J. Stauvermann & Ronald R. Kumar, 2016. "Sustainability of A Pay-as-you-Go Pension System in A Small Open Economy with Ageing, Human Capital and Endogenous Fertility," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 2-20, February.
    24. Pan, Jiun-Nan & Yang, Yan-Jie, 2020. "The impact of economic uncertainty on the decision of fertility: Evidence from Taiwan," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    25. Banyár, József, 2021. "Az emberi gesztáció finanszírozása vagy emberitőke-alapú nyugdíjrendszer? Augusztinovics Mária nyugdíjrendszer-elképzelései újra megfontolva [Financing human gestation or a human capital-based pension system? Mária Augusztinovicss ideas on the pen," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 987-1011.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • 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
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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