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Pensions with endogenous and stochastic fertility

  • Helmut Cremer

    ()

    (UMR INRA / CNRS / Univ. Toulouse 1 : Groupe de Recherche en Economie Mathématique et Quantitative, INRA
    Université des Sciences Sociales (Toulouse 1))

  • Firouz Gahvari

    (University of Illinois)

  • Pierre Pestieau

    (Centre de Recherche en Économie Publique et de la Population, Université de Liège)

This paper studies the design of a pay-as-you-go social security system in an overlapping generations model where fertility is in part stochastic and in part determined through capital investment. If investments are publicly observable, pension benefits must be linked positively to the level of investment, and payroll taxes negatively to the number of children. The outcome is characterized by full insurance with all parents, regardless of their number of children, enjoying identical consumption levels. Without observability, benefits must increase, and payroll taxes decrease, with the number of children. The second-best level of investment, and the resulting average fertility rate, are less than their corresponding first-best levels.

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Paper provided by Institut National de la Recherche Agronomique, France in its series Working Papers with number 22594.

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Length: 2303-2321
Date of creation: 2006
Date of revision:
Publication status: Published in Journal of Public Economics
Handle: RePEc:inr:wpaper:22594
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  1. Bental, Benjamin, 1989. "The Old Age Security Hypothesis and Optimal Population Growth," Journal of Population Economics, Springer, vol. 1(4), pages 285-301.
  2. G. ABIO & Géraldine MAHIEU & C. Patxot, 2002. "On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Fenge, Robert & Meier, Volker, 2005. "Pensions and Fertility Incentives," Munich Reprints in Economics 20343, University of Munich, Department of Economics.
  4. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Munich Reprints in Economics 938, University of Munich, Department of Economics.
  5. Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2004. "Pensions with Heterogenous Individuals and Endogenous Fertility," IDEI Working Papers 313, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Alessandro Cigno & Annalisa Luporini & Anna Pettini, 2000. "Tranfers to families with children as a principal-agent problem," CHILD Working Papers wp02_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  7. repec:dgr:kubcen:200027 is not listed on IDEAS
  8. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  9. van Groezen, B.J.A.M. & Leers, T. & Meijdam, A.C., 2000. "Family Size, Looming Demographic Changes and the Efficiency of Social Security Reform," Discussion Paper 2000-27, Tilburg University, Center for Economic Research.
  10. Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer, vol. 10(3), pages 335-356.
  11. 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.
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