IDEAS home Printed from https://ideas.repec.org/p/cor/louvrp/3163.html

Investment in children, social security, and intragenerational risk sharing

Author

Listed:
  • Fan, Simon
  • Pang, Yu
  • Pestieau, Pierre

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

Abstract

We analyze the role of pay-as-you-go social security in intragenerational risk sharing in an overlapping-generations model with individual heterogeneity. Parents invest in their children’s education in state schools in exchange for old-age financial support. Due to random factors such as luck in the job market, children may have different earning capacities despite that they receive the same education. Without social security, a parent gets a transfer payment from her own child, so the received amount is uncertain as it depends on the child’s earnings. The social security scheme, which essentially serves to pool transfer contributions from all children and then redistribute them equally to each parent, insures parents against the risk of educational investments. Our model shows that social security stimulates educational spending, enhances labor earnings, and increases ex ante individual utility. However, it may worsen ex post intragenerational inequality of lifetime income.

Suggested Citation

  • Fan, Simon & Pang, Yu & Pestieau, Pierre, 2021. "Investment in children, social security, and intragenerational risk sharing," LIDAM Reprints CORE 3163, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:3163
    DOI: https://doi.org/10.1007/s10797-021-09664-3
    Note: In: International Tax and Public Finance, 2021
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhiping Song & Peishan Tong, 2022. "The Impact of Social Security Expenditure on Human Common Development: Evidence from China’s Provincial Panel Data," Sustainability, MDPI, vol. 14(17), pages 1-12, September.
    2. Toshiki Tamai, 2023. "Social security, economic growth, and social welfare in an overlapping generation model with idiosyncratic TFP shock and heterogeneous workers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1829-1862, July.
    3. Herdis Herdiansyah & Randi Mamola & Ninin Ernawati, 2024. "Intragenerational Dynamics in the Indonesian Oil Palm Growth Zone: The Resolution between Circular Dimensions and Human Capital," Sustainability, MDPI, vol. 16(8), pages 1-19, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cor:louvrp:3163. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alain GILLIS (email available below). General contact details of provider: https://edirc.repec.org/data/coreebe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.