The Vulnerability of Social Security When Fertility is Endogenous

Bas van Groezen, Theo Leers and Lex Meijdam

Journal of Institutional and Theoretical Economics (JITE), 2002, vol. 158, issue 4, 715-730

Abstract: This paper analyses the effects of rumours and changes in life expectancy in an economywith endogenous fertility and pay-as-you-go (PAYG) pensions. We show that the endogeneity of fertility makes society vulnerable to both pessimistic beliefs and an increasing life span. On the one hand, rumours that pension benefits decrease appear to be self-fulfilling in the short run. On the other hand, increasing longevity deteriorates the PAYG pension scheme both in the short and in the long run, as the number of children permanently declines.

JEL-codes: D10 D84 H55 J11 J13 J14 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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