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Evaluating welfare and economic effects of raised fertility

Author

Listed:
  • Krzysztof Makarski

    (Warsaw School of Economics)

  • Joanna Tyrowicz

    () (Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University)

  • Magda Malec

    (Warsaw School of Economics)

Abstract

Many countries consider rising fertility through pro-family policies as a solution to the fiscal pressure stemming from longevity. However, an increased number of births implies immediate private costs and only delayed public benefits of younger and larger population. We propose using an overlapping generations model with a rich family structure to quantify the effects of simulated increases to the birth rates. We analyze the overall macroeconomic and welfare effects of these simulated paths relative to status quo. We also study the distribution of these effects across cohorts and study the sensitivity of the final effects to the assumed target value and path of increased fertility. Since our study tries to quantify the possible effects of pro-natalistic policies, we focus of public costs and benefits of having children. We find that fiscal effects are positive, but short of the natalistic expenditures in many countries. The sign and the size of both welfare and fiscal effects depend on the patterns of increased fertility.

Suggested Citation

  • Krzysztof Makarski & Joanna Tyrowicz & Magda Malec, 2019. "Evaluating welfare and economic effects of raised fertility," IAAEU Discussion Papers 201902, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  • Handle: RePEc:iaa:dpaper:201902
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    fertility; welfare; natalistic policies; overlapping generations model;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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