IDEAS home Printed from https://ideas.repec.org/p/wpc/wplist/wp07_01.html
   My bibliography  Save this paper

The Role of Social Security in Household Decisions: VAR Estimates of Saving and Fertility Behaviour in Germany

Author

Listed:
  • Alessandro Cigno,
  • Luca Casolaro
  • Furio C. Rosati

Abstract

Estimating saving and fertility simultaneously by the VAR method, we find that social security cover has a positive effect on household saving, and a negative effect on fertility. In Germany, as in other countries where the hypothesis was tested,social security is thus good for growth. A possible explanation for this unconventional finding is that compulsory saving in the form of pension contributions tends to displace intra-family transfers, rather than asset formation. However, the negative effect of social security on fertility tends to erode the system’s own contributory base, because it reduces the number of future contributors. That is one of the reasons why, in Germany as elsewhere, pay-as-you-go pension systems tend to be financially unstable. To some extent, this is counteracted by child-related benefits, which tend to encourage fertility, but the effect appears to be weak.

Suggested Citation

  • Alessandro Cigno, & Luca Casolaro & Furio C. Rosati, 2001. "The Role of Social Security in Household Decisions: VAR Estimates of Saving and Fertility Behaviour in Germany," CHILD Working Papers wp07_01, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    • Handle: RePEc:wpc:wplist:wp07_01
    as

    Download full text from publisher

    File URL: http://www.child.carloalberto.org/images/wp/child7_2001.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    2. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1335-1357, July.
    3. Graham, John W., 1989. "International differences in saving rates and the life cycle hypothesis : Reply and further evidence," European Economic Review, Elsevier, vol. 33(7), pages 1499-1507, September.
    4. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    5. Rosati, Furio Camillo, 1996. "Social security in a non-altruistic model with uncertainty and endogenous fertility," Journal of Public Economics, Elsevier, vol. 60(2), pages 283-294, May.
    6. Niels Haldrup, 1998. "An Econometric Analysis of I(2) Variables," Journal of Economic Surveys, Wiley Blackwell, vol. 12(5), pages 595-650, December.
    7. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    8. Stock, James H, 1987. "Asymptotic Properties of Least Squares Estimators of Cointegrating Vectors," Econometrica, Econometric Society, vol. 55(5), pages 1035-1056, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Robert Fenge & Volker Meier, 2005. "Pensions and fertility incentives," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(1), pages 28-48, February.
    2. Kruse, Agneta & Nyberg, Kristian, 2004. "Pensions and external effects of ageing; effects on distribution," Working Papers 2004:27, Lund University, Department of Economics.
    3. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1335-1357, July.
    4. Hans-Werner Sinn, 2005. "Europe’s Demographic Deficit A Plea For A Child Pension System," De Economist, Springer, vol. 153(1), pages 1-45, December.
    5. Oshio, Takashi & 小塩, 隆士 & オシオ, タカシ, 2003. "Social Security, Child Allowances, and Endogenous Fertility," Discussion Paper 171, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    6. 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.
    7. Hans-Werner Sinn, 2003. "Das demographische Defizit - die Fakten, die Folgen, die Ursachen und ihre Politikimplikationen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 56(05), pages 20-36, March.
    8. CAMILLI, Andrea; LAGERBORG, Andresa, 2017. "Do Labor Market Institutions Matter for Fertility?," Economics Working Papers ECO 2017/07, European University Institute.
    9. Krieger, Tim, 2005. "Renten und Zuwanderung: Ein Überblick über neue Ergebnisse der Forschung," Arbeitspapiere der Nordakademie 2005-04, Nordakademie - Hochschule der Wirtschaft.
    10. Cigno, Alessandro & Rosati, Furio C. & Tzannatos, Zafiris, 2002. "Child labor handbook," Social Protection Discussion Papers and Notes 25507, The World Bank.
    11. Alfredo M. Pereira & Jorge M. Andraz, 2014. "On the Long-Term Macroeconomic Effects of Social Security Spending: Evidence for 12 EU Countries," CEFAGE-UE Working Papers 2014_08, University of Evora, CEFAGE-UE (Portugal).
    12. Hans-Werner Sinn, 2013. "Das demographische Defizit – die Fakten, die Folgen, die Ursachen und die Politikimplikationen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(21), pages 03-23, November.
    13. GAGGERMEIER Christian & LUCKE Bernd, 2010. "Pension Systems and Population Growth: An Overlapping-Generations Model with Endogenous Birth Rates," EcoMod2003 330700056, EcoMod.
    14. Sinn, Hans-Werner, 2005. "Europe's Demographic Deficit," Munich Reprints in Economics 934, University of Munich, Department of Economics.

    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. Ekaterini Panopoulou, 2005. "A Resolution of the Fisher Effect Puzzle: A Comparison of Estimators," Money Macro and Finance (MMF) Research Group Conference 2005 18, Money Macro and Finance Research Group.
    2. Crowder, William J., 1995. "Covered interest parity and international capital market efficiency," International Review of Economics & Finance, Elsevier, vol. 4(2), pages 115-132.
    3. Antràs Pol, 2004. "Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-36, April.
    4. Herzer, Dierk, 2013. "Cross-Country Heterogeneity and the Trade-Income Relationship," World Development, Elsevier, vol. 44(C), pages 194-211.
    5. Herzer, Dierk & Nunnenkamp, Peter, 2015. "Income inequality and health: Evidence from developed and developing countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-56.
    6. Goldberg, Michael D. & Frydman, Roman, 1996. "Empirical exchange rate models and shifts in the co-integrating vector," Structural Change and Economic Dynamics, Elsevier, vol. 7(1), pages 55-78, March.
    7. Adrian C. Darnell, 1994. "A Dictionary Of Econometrics," Books, Edward Elgar Publishing, number 118.
    8. Chae-Deug Yi, 2003. "An Empirical Analysis of Ricardian Equivalence on Real Exchange Rate and Current Account: Korea," International Economic Journal, Taylor & Francis Journals, vol. 17(4), pages 61-83.
    9. Meher Manzur & Wing-Keung Wong & Inn-Chau Chee, 1999. "Measuring international competitiveness: experience from East Asia," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1383-1391.
    10. Kaufmann, Robert K. & Dees, Stephane & Gasteuil, Audrey & Mann, Michael, 2008. "Oil prices: The role of refinery utilization, futures markets and non-linearities," Energy Economics, Elsevier, vol. 30(5), pages 2609-2622, September.
    11. Zhiqiu Lin & Augustine Brannigan, 2003. "Advances in the Analysis of Non-stationary Time Series: An Illustration of Cointegration and Error Correction Methods in Research on Crime and Immigration," Quality & Quantity: International Journal of Methodology, Springer, vol. 37(2), pages 151-168, May.
    12. Carone, Giuseppe, 1996. "Modeling the U.S. demand for imports through cointegration and error correction," Journal of Policy Modeling, Elsevier, vol. 18(1), pages 1-48, February.
    13. Max Gillman & Michal Kejak & Giulia Ghiani, 2014. "Money, Banking and Interest Rates: Monetary Policy Regimes with Markov-Switching VECM Evidence," CEU Working Papers 2014_3, Department of Economics, Central European University.
    14. Herzer, Dierk, 2014. "Unions and income inequality: a heterogenous cointegration and causality analysis," Working Paper 146/2014, Helmut Schmidt University, Hamburg.
    15. Committee, Nobel Prize, 2003. "Time-series Econometrics: Cointegration and Autoregressive Conditional Heteroskedasticity," Nobel Prize in Economics documents 2003-1, Nobel Prize Committee.
    16. Charles G. Renfro, 2009. "The Practice of Econometric Theory," Advanced Studies in Theoretical and Applied Econometrics, Springer, number 978-3-540-75571-5, July-Dece.
    17. James Davidson, 2013. "Cointegration and error correction," Chapters, in: Nigar Hashimzade & Michael A. Thornton (ed.), Handbook of Research Methods and Applications in Empirical Macroeconomics, chapter 7, pages 165-188, Edward Elgar Publishing.
    18. Chien-Chiang Lee & Chun-Ping Chang, 2006. "Social security expenditure and GDP in OECD countries: A cointegrated panel analysis," International Economic Journal, Taylor & Francis Journals, vol. 20(3), pages 303-320.
    19. Long, Zhiming & Herrera, Rémy, 2016. "Building original series of physical capital stocks for China's economy methodological problems, proposals for solutions and a new database," China Economic Review, Elsevier, vol. 40(C), pages 33-53.
    20. Gerardo Esquivel & Raúl Razo, 2003. "Fuentes de la inflación en México, 1989-2000: Un análisis multicausal de corrección de errores," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 18(2), pages 181-226.

    More about this item

    Keywords

    Social security; Household decision; VAR; saving; fertility; Germany;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • D10 - Microeconomics - - Household Behavior - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

    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:wpc:wplist:wp07_01. 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: Giovanni Bert (email available below). General contact details of provider: https://edirc.repec.org/data/childit.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.