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Pension Design when Fertility Fluctuates: The Role of Capital Mobility and Education Financing

  • Jovan Zamac

This study compares alternative designs of an unfunded pension system. Convex combinations between a fixed contribution rate and a fixed benefit rate are considered. The objective is to maximize the expected ex-ante welfare under stochastic fertility. The model is a three-period CGE framework where the design of the education system and effects on factor prices are accounted for. The effects on factor prices depend on the degree of capital mobility. For low degrees of capital mobility it is optimal to have a fixed benefit rate in the pension system. But for the small open economy, a fixed contribution rate is optimal if the education system has a fixed benefit rate. This design of education and pension systems assures that individuals in the small open economy are unaffected by fertility fluctuations.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1569.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1569
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  1. Maurice Obstfeld & Kenneth Rogoff, 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Working Papers 7777, National Bureau of Economic Research, Inc.
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  7. BOADWAY, Robin & MARCHAND, Maurice & PESTIEAU, Pierre, . "Pay-as-you go social security in a changing environment," CORE Discussion Papers RP 961, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  16. repec:fth:harver:1490 is not listed on IDEAS
  17. Smith, Alasdair, 1982. "Intergenerational transfers as social insurance," Journal of Public Economics, Elsevier, vol. 19(1), pages 97-106, October.
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  19. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," NBER Working Papers 3358, National Bureau of Economic Research, Inc.
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