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Intergenerational redistribution in a small open economy with endogenous fertility

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  • Martin Kolmar

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

Abstract

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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    More about this item

    Keywords

    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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