Pensions with Heterogenous Individuals and Endogenous Fertility

Helmuth Cremer (), Firouz Gahvari () and Pierre Pestieau ()

No 5553, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies the design of pension schemes in a society where fertility is endogenous and parents differ in their ability to raise children. In a world with perfect information, a pay-as-you-go social security system is characterized by equal pensions for all but different contributions which may or may not increase with the number of children. Additionally, fertility must be subsidized at the margin to correct for the externality that accompanies fertility. In a world of asymmetric information, incentive-related distortions supplement the Pigouvian subsidy. These may either require an additional subsidy or an offsetting tax on fertility depending on whether the redistribution is towards people with more or less children. In the former case, pensions are decreasing in the number of children: in the latter case, they are increasing.

Keywords: adverse selection; fertility; pensions (search for similar items in EconPapers)
JEL-codes: H55 J13 J26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2006-03
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Related works:
Working Paper: Pensions with heterogenous individuals and endogenous fertility (2006)
Working Paper: Pensions with Heterogenous Individuals and Endogenous Fertility (2004)
Journal Article: Pensions with heterogenous individuals and endogenous fertility (2008)
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