ENDOGENOUS FERTILITY POLICY AND UNFUNDED PENSIONS

Alison Lee Booth () and Facundo Sepulveda ()

CAMA Working Papers from Australian National University, Centre for Applied Macroeconomic Analysis

Abstract: We study the joint determination of fertility subsidies and Social Security taxes in an overlapping generations model where agents are heterogeneous in endowments. In equilibria where Social Security is valued, old and poor young agents form a coalition that sustains Social Security. When voting for fertility subsidies, the young take into account both the deadweight loss of such subsidies and the gains from a higher future tax base. They also take into account a third effect of increasing population growth: that of a decrease in future Social Security benefits as a consequence of a change in the identity of the future decisive voter.

JEL-codes: E62 H2 H30 H55 J13 J14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
Date: Written 2007-03
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