Endogenous Fertility Policy and Unfunded Pensions

Alison Booth and Facundo Sepulveda

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

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 e®ect 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.

Keywords: political economy; OLG models; social security; endogenous fertility; redistribution (search for similar items in EconPapers)
JEL-codes: E62 H2 H30 H55 J13 J14 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2007-06

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