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Pay-as-you-go social security and endogenous fertility in a neoclassical growth model

  • Koichi Miyazaki

    ()

This paper theoretically studies how unfunded pay-as-you-go social security affects economic growth, the fertility rate, and welfare in a neoclassical growth model. In addition, this paper considers a more general form of child-rearing cost, which is a mixture of time and money. The first observation is that whether the fertility rate increases or not by the expansion of the pay-as-you-go social security depends on (1) the size of the monetary child-rearing cost relative to the time spent on child-rearing and (2) the current fertility and interest rate in laissez faire. The second observation is that income per worker can increase by an expansion in pay-as-you-go social security when the output elasticity of capital is sufficiently small and the payroll tax rate is high. The last finding is that welfare can be improved even though capital is underaccumulated in an economy. Copyright Springer-Verlag Berlin Heidelberg 2013

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File URL: http://hdl.handle.net/10.1007/s00148-012-0451-7
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Article provided by European Society for Population Economics in its journal Journal of Population Economics.

Volume (Year): 26 (2013)
Issue (Month): 3 (July)
Pages: 1233-1250

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Handle: RePEc:spr:jopoec:v:26:y:2013:i:3:p:1233-1250
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  1. Fanti, Luciano & Gori, Luca, 2012. "A note on endogenous fertility, child allowances and poverty traps," Economics Letters, Elsevier, vol. 117(3), pages 722-726.
  2. David de la Croix & Matthias Doepke, 2001. "Inequality and Growth: Why Differential Fertility Matters," UCLA Economics Working Papers 803, UCLA Department of Economics.
  3. Gary S. Becker & Robert J. Barro, 1986. "A Reformulation of the Economic Theory of Fertility," NBER Working Papers 1793, National Bureau of Economic Research, Inc.
  4. Berthold U. Wigger, 1999. "Pay-as-you-go financed public pensions in a model of endogenous growth and fertility," Journal of Population Economics, European Society for Population Economics, vol. 12(4), pages 625-640.
  5. Lapan, Harvey E. & Enders, Walter, 1990. "Endogenous fertility, Ricardian equivalence, and debt management policy," Journal of Public Economics, Elsevier, vol. 41(2), pages 227-248, March.
  6. Nishimura, K. & Zhang, J., 1990. "Pay-As-You-Go Public Pensions With Endogenous Fertility," Papers 202, Australian National University - Department of Economics.
  7. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
  8. Wildasin, David E, 1990. "Non-neutrality of Debt with Endogenous Fertility," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 414-28, April.
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  11. Fanti, Luciano & Gori, Luca, 2010. "Increasing PAYG pension benefits and reducing contribution rates," Economics Letters, Elsevier, vol. 107(2), pages 81-84, May.
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  13. Yeopil Yoon & Gabriel Talmain, . "Endogenous Fertility, Endogenous Growth and Public Pension System: Should We Switch from a PAYG to a Fully-Funded System?," Discussion Papers 00/31, Department of Economics, University of York.
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  15. repec:cor:louvrp:-1676 is not listed on IDEAS
  16. Makoto Hirazawa & Akira Yakita, 2009. "Fertility, child care outside the home, and pay-as-you-go social security," Journal of Population Economics, European Society for Population Economics, vol. 22(3), pages 565-583, July.
  17. Cigno, Alessandro, 1995. "Public pensions with endogenous fertility: Comment on Nishimura and Zhang," Journal of Public Economics, Elsevier, vol. 57(1), pages 169-173, May.
  18. Michele Boldrin & Mariacristina De Nardi & Larry E. Jones, 2005. "Fertility and Social Security," Staff Report 359, Federal Reserve Bank of Minneapolis.
  19. Apps, Patricia & Rees, Ray, 2001. "Household production, full consumption and the costs of children," Labour Economics, Elsevier, vol. 8(6), pages 621-648, December.
  20. Alessandro Cigno, 2006. "A constitutional theory of the family," Journal of Population Economics, European Society for Population Economics, vol. 19(2), pages 259-283, June.
  21. Bental, Benjamin, 1989. "The Old Age Security Hypothesis and Optimal Population Growth," Journal of Population Economics, European Society for Population Economics, vol. 1(4), pages 285-301.
  22. Zhang, Junxi, 1995. "Does unfunded social security also depress output growth?," Economics Letters, Elsevier, vol. 49(3), pages 307-312, September.
  23. Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-44, August.
  24. Fanti, Luciano & Gori, Luca, 2010. "Fertility and PAYG pensions in the overlapping generations model," MPRA Paper 25811, University Library of Munich, Germany.
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