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Social security and family support

Author

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  • LEROUX, Marie-Louise

    () (Département des Sciences Economiques, UQAM, Montréal, Canada)

  • PESTIEAU, Pierre

    () (University of Liège, CREPP, B-4000 Liège, Belgium: Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium; PSE, Paris, France and CEPR)

Abstract

This paper shows how the role of the market, the state and the family in providing financial support at old age has evolved over time with changes in factors such as the reliability and the effectiveness of family support, the rate of interest, the cost of public funds and earning inequality. We model a society in which agents with different productivity are asked to vote over the existence of a Beveridgian pension system. We show that when children assistance is certain and large, agents may rely exclusively on family to finance old-age consumption and prefer to vote for a zero tax rate. Only if income inequalities are very large, a majority will be in favor of a pension system. However, when the size and the likelihood of family generosity decreases, a pension system is more likely to emerge. In that case, agents supplement children assistance with pension benefits. A pension system is also more likely to emerge when the cost of public fund is small and the return from private savings is high.

Suggested Citation

  • LEROUX, Marie-Louise & PESTIEAU, Pierre, 2011. "Social security and family support," CORE Discussion Papers 2011045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2011045
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    References listed on IDEAS

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    Cited by:

    1. Degan, Arianna & Thibault, Emmanuel, 2016. "Dynastic accumulation of wealth," Mathematical Social Sciences, Elsevier, vol. 81(C), pages 66-78.
    2. Chiara Canta & Pierre Pestieau & Emmanuel Thibault, 2016. "Long-term care and capital accumulation: the impact of the State, the market and the family," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 755-785.
    3. Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2017. "Uncertain altruism and the provision of long term care," Journal of Public Economics, Elsevier, pages 12-24.
    4. Mikko Puhakka & Matti Viren, 2012. "Social Security, Saving and Fertility," Finnish Economic Papers, Finnish Economic Association, vol. 25(1), pages 28-42, Spring.

    More about this item

    Keywords

    social security; old-age security; family solidarity;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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