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Pension and Child Care Policies with Endogenous Fertility

Author

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  • Masaya Yasuoka
  • Naohisa Goto

Abstract

This paper describes how a child allowance policy and income transfer to older people policy alter fertility and economic growth under a pay-as-you-go pension system. Moreover, this paper presents ways to finance such policies: one for income taxation and the other for consumption tax. The results presented in this paper are as follows. First, the relation between fertility and economic growth depends on fertility. This relation is positive if fertility is at a certain level. However, if fertility is low or high, this relation is negative. Second, a child allowance does not always raise the fertility rate. On the other hand, income transfer to older people raises the fertility rate. This result underscores that it is important to consider policies for older people when considering how to raise the fertility rate. Income transfer to older people financed by consumption taxation can achieve two goals: increasing fertility in a society with fewer children, and providing income security for older people.

Suggested Citation

  • Masaya Yasuoka & Naohisa Goto, 2009. "Pension and Child Care Policies with Endogenous Fertility," Global COE Hi-Stat Discussion Paper Series gd09-054, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd09-054
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd09-054.pdf
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    References listed on IDEAS

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    1. Takashi Oshio & Masaya Yasuoka, 2009. "Maximum size of social security in a model of endogenous fertility," Economics Bulletin, AccessEcon, vol. 29(2), pages 644-654.
    2. Bas Groezen & Lex Meijdam, 2008. "Growing old and staying young: population policy in an ageing closed economy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(3), pages 573-588, July.
    3. Makoto Hirazawa & Akira Yakita, 2009. "Fertility, child care outside the home, and pay-as-you-go social security," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(3), pages 565-583, July.
    4. Joëlle Sleebos, 2003. "Low Fertility Rates in OECD Countries: Facts and Policy Responses," OECD Labour Market and Social Policy Occasional Papers 15, OECD Publishing.
    5. FranÚois Bourguignon, 1999. "The cost of children: May the collective approach to household behavior help?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 503-521.
    6. 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.
    7. Nishimura, Kazuo & Zhang, Junsen, 1992. "Pay-as-you-go public pensions with endogenous fertility," Journal of Public Economics, Elsevier, vol. 48(2), pages 239-258, July.
    8. Junsen Zhang & Junxi Zhang, 1998. "Social Security, Intergenerational Transfers, and Endogenous Growth," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1225-1241, November.
    9. Tetsuo Ono, 2003. "Social security policy with public debt in an aging economy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(2), pages 363-387, May.
    10. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
    11. Fanti, Luciano & Gori, Luca, 2009. "Population and neoclassical economic growth: A new child policy perspective," Economics Letters, Elsevier, vol. 104(1), pages 27-30, July.
    12. Shuanglin Lin & Xiaowen Tian, 2003. "Population growth and social security financing," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(1), pages 91-110, February.
    13. van Groezen, Bas & Leers, Theo & Meijdam, Lex, 2003. "Social security and endogenous fertility: pensions and child allowances as siamese twins," Journal of Public Economics, Elsevier, vol. 87(2), pages 233-251, February.
    14. Berthold U. Wigger, 1999. "Pay-as-you-go financed public pensions in a model of endogenous growth and fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 625-640.
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    Citations

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    Cited by:

    1. Day, Creina & Guest, Ross, 2016. "Fertility and female wages: A new link via house prices," Economic Modelling, Elsevier, vol. 53(C), pages 121-132.
    2. Masaya Yasuoka & Naohisa Goto, 2015. "How is the child allowance to be financed? By income tax or consumption tax?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(3), pages 249-269, September.
    3. Miyake, Atsushi & Yasuoka, Masaya, 2016. "Public Education and Child-Care Policies with Pay-As-You-Go Pension," MPRA Paper 75315, University Library of Munich, Germany.
    4. Yasuoka, Masaya, 2018. "Endogenous Fertility and Pension System," MPRA Paper 86131, University Library of Munich, Germany.
    5. repec:eee:joecag:v:7:y:2016:i:c:p:53-60 is not listed on IDEAS
    6. Masatoshi Jinno & Masaya Yasuoka, 2016. "Are the social security benefits of pensions or child-care policies best financed by a consumption tax?," Business and Economic Horizons (BEH), Prague Development Center, vol. 12(3), pages 94-112, September.
    7. Masaya Yasuoka, 2013. "Can Child-Care Support Policies Halt Decreasing Fertility?," International Journal of Economics and Financial Issues, Econjournals, vol. 3(2), pages 409-419.
    8. Masaya Yasuoka, 2014. "Child-care Policies and Pension in an Endogenous Fertility Model," Discussion Paper Series 114, School of Economics, Kwansei Gakuin University, revised Jan 2014.

    More about this item

    Keywords

    Child allowance; Endogenous fertility; Pay-as-you-go pension system; Taxation;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • 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
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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