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Intergenerational redistribution in a small open economy with endogenous fertility


  • Martin Kolmar

    () (Faculty of Economics and Statistics and SFB 178, University of Konstanz, P.O. Box 5560-136, D-78434 Konstanz, Germany)


For pay-as-you-go financed pension systems, claims may be calculated according to individual contributions (income) or the number of children of a family. We analyse the optimal structure of these parameters in a model with endogenous fertility. It is shown that for both structural determinants there exists no interior solution of the problem of intragenerational utility maximisation. Thus, pure systems are always welfare maximizing. Furthermore, children-related pension claims induce a fiscal externality that tends to be positive. The determination of the optimal contribution rate shows that the widely accepted Aaron-condition is in general a misleading indicator for the comparison of fully funded and pay-as-you-go financed pension systems.

Suggested Citation

  • Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(3), pages 335-356.
  • Handle: RePEc:spr:jopoec:v:10:y:1997:i:3:p:335-356
    Note: Received March 12, 1996 / Accepted January 27, 1997

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    References listed on IDEAS

    1. Kalemli-Ozcan, Sebnem & Ryder, Harl E. & Weil, David N., 2000. "Mortality decline, human capital investment, and economic growth," Journal of Development Economics, Elsevier, vol. 62(1), pages 1-23, June.
    2. Hoyt Bleakley & Fabian Lange, 2009. "Chronic Disease Burden and the Interaction of Education, Fertility, and Growth," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 52-65, February.
    3. David N. Weil & Oded Galor, 1999. "From Malthusian Stagnation to Modern Growth," American Economic Review, American Economic Association, vol. 89(2), pages 150-154, May.
    4. Michael D. Hurd & Kathleen McGarry, 2002. "The Predictive Validity of Subjective Probabilities of Survival," Economic Journal, Royal Economic Society, vol. 112(482), pages 966-985, October.
    5. Tamura, Robert, 2006. "Human capital and economic development," Journal of Development Economics, Elsevier, vol. 79(1), pages 26-72, February.
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    More about this item


    Endogenous fertility · pay-as-you-go financed pension systems;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions


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