Endogenous Fertility, Endogenous Growth and Public Pension System: Should We Switch from a PAYG to a Fully-Funded System?
This paper studies the implications of state pension plan reform on fertility and on growth. It extends the Grossman and Yanagawa (1993) endogenous growth framework by incorporating altruism, making fertility endogenous. We investigate the effect on long-run growth of a switch from a Pay-As-You-Go (PAYG) pension system to a fully-funded system. We show that a PAYG pension system is associated with a lower fertility rate than a fully-funded system. This lower fertility in turn increases the rate of growth. Hence, switching from a PAYG system to a fully-funded system may be harmful, especially for developing countries in which limited resources are heavily stressed by high fertility rates. In addition, we propose a hypothetical pension system, the Saving Subsidy Program (SSP), which would yield a higher growth rate than the PAYG system. The SSP consists of a minimum benefit level for each retiree and of a subsidy to private savings.
|Date of creation:|
|Contact details of provider:|| Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom|
Phone: (0)1904 323776
Web page: https://www.york.ac.uk/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin Feldstein & Andrew Samwick, 1996.
"The Transition Path in Privatizing Social Security,"
NBER Working Papers
5761, National Bureau of Economic Research, Inc.
- Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters, in: Privatizing Social Security, pages 215-264 National Bureau of Economic Research, Inc.
- Keith Blackburn & Giam Pietro Cipriani, 1998. "Endogenous fertility, mortality and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(4), pages 517-534.
- Gale, W.G. & Scholtz, J.K., 1992. "IRAs and household saving," Discussion Paper 1992-44, Tilburg University, Center for Economic Research.
- Gale, W.G. & scholz, J.K., 1992.
"IRAS and Household Saving,"
9244, Tilburg - Center for Economic Research.
- 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.
- Nishimura, K. & Zhang, J., 1990. "Pay-As-You-Go Public Pensions With Endogenous Fertility," Papers 202, Australian National University - Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:yor:yorken:00/31. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paul Hodgson)
If references are entirely missing, you can add them using this form.