Endogenous Fertility, Externalities, and Efficiency in Old-Age Pension Systems

Ludwig von Auer and Bettina Büttner

Journal of Institutional and Theoretical Economics (JITE), 2004, vol. 160, issue 2, 294-310

Abstract: Due to falling fertility and rising life expectancies, a serious financial crisis is looming over the pay-as-you-go pension systems established in many developed countries. The present study demonstrates that falling fertility can partly be explained by the fiscal externalities arising from the bad design of established pay-as-you-go pension systems. It is shown that these externalities also arise in ill-designed funded systems and that for both types of pension systems one can construct variants that internalize these externalities and result in a Pareto improvement.

JEL-codes: H55 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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