Pensions with endogenous and stochastic fertility

Helmuth Cremer, Pierre Pestieau and Firouz Gahvari

No 2004067, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper studies the design of a pay-as-you-go social security system in a society where fertility is in part stochastic and in part determined through capital investment. If parents' investments in children are publicly observable, pension benefits must be linked positively to the the level of investment, and payroll taxes negatively to the number of children. The outcome is characterized by full insurance with all parents, regardless of their number of children, enjoying identical consumption levels. Without observability, benefits must increase, and payroll taxes decrease, with the number of children. The second-best level of investment in children, and the resulting average fertility rate, are less than their corresponding first-best levels.

Keywords: pay-as-you-go social security; endogenous fertility; storage; moral hazard; Samuelson’s condition (search for similar items in EconPapers)
JEL-codes: H55 J13 (search for similar items in EconPapers)
Date: 2004-09
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Pensions with endogenous and stochastic fertility (2006)
Working Paper: Pensions with endogenous and stochastic fertility (2006)
Working Paper: Pensions with endogenous and stochastic fertility (2006)
Working Paper: Pensions with Endogenous and Stochastic Fertility (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2004067

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