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Childbearing Age, Family Allowances, and Social Security

  • Pierre Pestieau

    ()

    (University of Liège, HEC-ULg, and CORE, Paris School of Economics and CEPR, Boulevard du Rectorat, bâtiment B31, 4000 Liège, Belgium;)

  • Gregory Ponthiere

    ()

    (Paris School of Economics and Ecole Normale Superieure, Paris. 48 boulevard Jourdan, 75014 Paris, France; corresponding author)

Although the optimal public policy under an endogenous number of children has been widely studied, the optimal public intervention under an endogenous timing of births has remained largely unexplored. This paper examines the optimal family policy when the timing of births is chosen by individuals who differ as to how early fertility weakens future earnings. We analyze the design of a policy of family allowances and of public pensions in such a setting, under distinct informational environments. Endogenous childbearing ages is shown to affect the optimal policy through the redistribution across the earnings dimension and the internalization of fertility externalities. Contrary to common practice, children benefits differentiated according to the age of parents can be part of the optimal family policy. Our results are robust to introducing: (i) children as durable “goods”; (ii) education choices; (iii) varying total fertility.

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File URL: http://dx.doi.org/10.4284/0038-4038-2012.061
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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 80 (2013)
Issue (Month): 2 (October)
Pages: 385-413

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Handle: RePEc:sej:ancoec:v:80:2:y:2013:p:385-413
Contact details of provider: Web page: http://www.southerneconomic.org/

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  1. d'Albis, Hippolyte & Augeraud-Véron, Emmanuelle & Schubert, Katheline, 2010. "Demographic-economic equilibria when the age at motherhood is endogenous," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1211-1221, November.
  2. Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2004. "Pensions with Heterogenous Individuals and Endogenous Fertility," IDEI Working Papers 313, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. Siv Gustafsson, 2001. "Optimal age at motherhood. Theoretical and empirical considerations on postponement of maternity in Europe," Journal of Population Economics, Springer, vol. 14(2), pages 225-247.
  4. 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, vol. 57(2), pages 349-364, June.
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  6. CREMER, Helmuth & PESTIEAU, Pierre & GAHVARI, Firouz, 2004. "Pensions with endogenous and stochastic fertility," CORE Discussion Papers 2004067, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. John Ermisch & David Pevalin, 2005. "Early motherhood and later partnerships," Journal of Population Economics, Springer, vol. 18(3), pages 469-489, 09.
  8. Cigno, Alessandro, 1986. "Fertility and the Tax-Benefit System: A Reconsideration of the Theory of Family Taxation," Economic Journal, Royal Economic Society, vol. 96(384), pages 1035-51, December.
  9. Heckman, James J & Walker, James R, 1990. "The Relationship between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal Data," Econometrica, Econometric Society, vol. 58(6), pages 1411-41, November.
  10. Pierre Pestieau & Grégory Ponthière, 2011. "Optimal Fertility along the Lifecycle," PSE Working Papers hal-00612609, HAL.
  11. Philip Merrigan & Yvan St-Pierre, 1995. "A Neoclassical and Econometric analysis of the Timing and Spacing of Births in Canada from 1950 to 1990," Cahiers de recherche du Département des sciences économiques, UQAM 9501, Université du Québec à Montréal, Département des sciences économiques.
  12. Samuelson, Paul A, 1975. "The Optimum Growth Rate for Population," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 531-38, October.
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  14. Anne Gauthier, 2007. "The impact of family policies on fertility in industrialized countries: a review of the literature," Population Research and Policy Review, Springer, vol. 26(3), pages 323-346, June.
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  16. Alessandro Balestrino & Alessandro Cigno & Anna Pettini, 2002. "Endogenous Fertility and the Design of Family Taxation," International Tax and Public Finance, Springer, vol. 9(2), pages 175-193, March.
  17. Heather Joshi, 2002. "Production, Reproduction, and Education: Women, Children, and Work in a British Perspective," Population and Development Review, The Population Council, Inc., vol. 28(3), pages 445-474.
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  19. PESTIEAU, Pierre & PONTHIERE, Grégory, 2011. "Optimal fertility along the lifecycle," CORE Discussion Papers 2011033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  20. Firouz Gahvari, 2009. "Pensions and fertility: in search of a link," International Tax and Public Finance, Springer, vol. 16(4), pages 418-442, August.
  21. Ermisch, John & Ogawa, Naohiro, 1994. "Age at Motherhood in Japan," Journal of Population Economics, Springer, vol. 7(4), pages 393-420, November.
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