IDEAS home Printed from https://ideas.repec.org/p/ctl/louvir/2002006.html
   My bibliography  Save this paper

On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting

Author

Listed:
  • G. ABIO

    (Universitat de Barcelona)

  • Géraldine MAHIEU

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • C. Patxot

    (Universitat de Barcelona)

Abstract

In order to help in designing an accurate pension reform, we determine the optimal resource allocation in an endogenous fertility model generating a demographic transition. Extending Samuelson’s (1975) work in such a setting, we analyze the problem of the interiority of the optimal solution and discuss the serendipity theorem. We then characterize the decentralization of the first best, showing that a pension policy linking pension benefits to the number of children constitutes an optimal social security program able to restore both the optimal capital stock and the optimal rate of pupulation growth as a unique instrument. We also show that neither a Beveridgean pension scheme nor a Bismarckian one can decentralize the first best.

Suggested Citation

  • G. ABIO & Géraldine MAHIEU & C. Patxot, 2002. "On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting," LIDAM Discussion Papers IRES 2002006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2002006
    as

    Download full text from publisher

    File URL: http://sites.uclouvain.be/econ/DP/IRES/2002-6.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michel, Philippe & Pestieau, P, 1993. "Population Growth and Optimality: When Does Serendipity Hold?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(4), pages 353-362, November.
    2. Deardorff, Alan V, 1976. "The Optimum Growth Rate for Population: Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 510-515, June.
    3. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 323-350, National Bureau of Economic Research, Inc.
    4. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
    5. Claire Loupias & Bertrand Wigniolle, 2004. "Régime de retraite et chute de natalité : évolution des moeurs ou arbitrage micro-économique," Annals of Economics and Statistics, GENES, issue 73, pages 63-99.
    6. Oded Galor & David N. Weil, 1998. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition," Working Papers 98-3, Brown University, Department of Economics, revised 19 Aug 1998.
    7. 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.
    8. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151.
    9. Bental, Benjamin, 1989. "The Old Age Security Hypothesis and Optimal Population Growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 1(4), pages 285-301.
    10. Galor, Oded & Weil, David, 1998. "Population, Technology and Growth: From the Malthusian Regime to the Demographic Transition," CEPR Discussion Papers 1981, C.E.P.R. Discussion Papers.
    11. Atkinson, A B & Sandmo, A, 1980. "Welfare Implications of the Taxation of Savings," Economic Journal, Royal Economic Society, vol. 90(359), pages 529-549, September.
    12. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
    13. Samuelson, Paul A, 1976. "The Optimum Growth Rate for Population: Agreement and Evaluations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 516-525, June.
    14. Peters, Wolfgang, 1995. "Public Pensions, Family Allowances and Endogenous Demographic Change," Journal of Population Economics, Springer;European Society for Population Economics, vol. 8(2), pages 161-183, May.
    15. Galor, Oded & Weil, David N, 1996. "The Gender Gap, Fertility, and Growth," American Economic Review, American Economic Association, vol. 86(3), pages 374-387, June.
    16. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
    17. Kolmar, Martin, 2001. "Optimal Intergenerational Redistribution in a Two-Country Model with Endogenous Fertility," Public Choice, Springer, vol. 106(1-2), pages 23-51, January.
    18. Schweizer, Urs, 1996. "Endogenous fertility and the Henry George Theorem," Journal of Public Economics, Elsevier, vol. 61(2), pages 209-228, August.
    19. David de la CROIX, 2014. "Economic Growth," LIDAM Discussion Papers IRES 2014019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    20. Samuelson, Paul A, 1975. "The Optimum Growth Rate for Population," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 531-538, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Concepció Patxot & Elisenda Rentería & Miguel Romero & Guadalupe Souto, 2012. "Measuring the balance of government intervention on forward and backward family transfers using NTA estimates: the modified Lee arrows," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 442-461, June.
    2. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 529-564, April.
    3. repec:ebl:ecbull:v:10:y:2003:i:4:p:1-7 is not listed on IDEAS
    4. Kolmar, Martin, 2001. "Optimal Intergenerational Redistribution in a Two-Country Model with Endogenous Fertility," Public Choice, Springer, vol. 106(1-2), pages 23-51, January.
    5. J. Ignacio Conde-Ruiz & Eduardo L. Giménez & Mikel Pérez-Nievas, 2010. "Millian Efficiency with Endogenous Fertility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(1), pages 154-187.
    6. Luciano Fanti & Luca Gori, 2012. "Public Expenditure on Health and Private Old-Age Insurance in an OLG Growth Model with Endogenous Fertility: Chaotic Dynamics Under Perfect Foresight," Computational Economics, Springer;Society for Computational Economics, vol. 40(4), pages 333-353, December.
    7. Peter J. Stauvermann & Ronald R. Kumar, 2016. "Sustainability of A Pay-as-you-Go Pension System in A Small Open Economy with Ageing, Human Capital and Endogenous Fertility," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 2-20, February.
    8. Luciano Fanti & Luca Gori, 2010. "Family Policies And The Optimal Population Growth Rate: Closed And Small Open Economies," Metroeconomica, Wiley Blackwell, vol. 61(1), pages 96-123, February.
    9. Stelter, Robert, 2016. "Over-aging — Are present-day human populations too old?," Mathematical Social Sciences, Elsevier, vol. 82(C), pages 116-143.
    10. Stelter, Robert, 2014. "Over-aging: Are present human populations too old?," Thuenen-Series of Applied Economic Theory 137, University of Rostock, Institute of Economics.
    11. Momota, Akira & Sakagami, Tomoya & Shibata, Akihisa, 2019. "Reexamination of the Serendipity Theorem from the stability viewpoint," Journal of Demographic Economics, Cambridge University Press, vol. 85(1), pages 43-70, March.
    12. Schweizer, Urs, 1996. "Endogenous fertility and the Henry George Theorem," Journal of Public Economics, Elsevier, vol. 61(2), pages 209-228, August.
    13. Peter J. Stauvermann & Ronald R. Kumar, 2017. "Enhancing growth and welfare through debt-financed education," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 30(1), pages 207-222, January.
    14. Klaus Jaeger & Wolfgang Kuhle, 2007. "The Optimum Growth Rate for Population Reconsidered," MEA discussion paper series 07147, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    15. Akiko Maruyama & Kazuhiro Yamamoto, 2010. "Variety expansion and fertility rates," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(1), pages 57-71, January.
    16. Blackburn, Keith & Cipriani, Giam Pietro, 2005. "Intergenerational transfers and demographic transition," Journal of Development Economics, Elsevier, vol. 78(1), pages 191-214, October.
    17. Gemma Abio, 2003. "Interiority of the optimal population growth rate with endogenous fertility," Economics Bulletin, AccessEcon, vol. 10(4), pages 1-7.
    18. Fanti, Luciano & Gori, Luca, 2012. "PAYG pensions, tax-cum-subsidy and A-Pareto efficiency," Research in Economics, Elsevier, vol. 66(1), pages 65-71.
    19. Robert Fenge & Volker Meier, 2005. "Pensions and fertility incentives," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 28-48, February.
    20. Robinson, James A. & Srinivasan, T.N., 1993. "Long-term consequences of population growth: Technological change, natural resources, and the environment," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 21, pages 1175-1298, Elsevier.
    21. Kolmar, Martin, 1997. "Optimal intergenerational redistribution and strategic incentives with two countries and endogenous fertility: Theory and application to the European Union," Discussion Papers, Series II 340, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".

    More about this item

    Keywords

    demographic transition; fertility; pensions; golden rule;
    All these keywords.

    JEL classification:

    • 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
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ctl:louvir:2002006. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Virginie LEBLANC (email available below). General contact details of provider: https://edirc.repec.org/data/iruclbe.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.