Unemployment benefit and the number of children

Ryouichi Ikeda ()
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Ryouichi Ikeda: Osaka University and Tokushima University

No 15-23, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: In this paper, I conducted an analytical investigation to investigate the effects of the income tax that funds unemployment benefits on the unemployment rate and the fertility rate. I took unemployment into consideration in an overlapping generations model, introducing a household in which the head of household is employed and one in which the head of household is unemployed and receiving unemployment benefits, and analyzed the effects of unemployment benefits on the numbers of the children in both households. In doing so, I developed an expression for the conditions of an increase (decrease) in the numbers of children due to an increase in the replacement rate of unemployment benefits in both the employed household and the unemployed household. I found that regardless of those conditions, an increase in the replacement rate of unemployment benefits inevitably decreased the number of the children in the whole economy. This paper is the first to show the reason for this decrease in the number of children in the whole economy due to a rise in the replacement rate of unemployed benefits and the analytical conditions of an increase (decrease) in the numbers of children in employed and unemployed households. Needless to say, unemployment benefits are important, but we also should consider the negative effects on the fertility rate to a certain degree.

Keywords: fertility; unemployment benefits; income tax; labor union; overlapping generations model (search for similar items in EconPapers)
JEL-codes: E24 H55 J13 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2015-09
New Economics Papers: this item is included in nep-dge and nep-mac
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