The Pay-As You-Go Pension System as a Fertility Insurance and Enforcement Device

Hans-Werner Sinn

No 2023, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: It is argued that a PAYGO system may have useful allocative functions in that it serves as an insurance against not having children and as an enforcement device for 'rotten kids' who are unwilling to pay their parents a pension. It is true that the system has a moral hazard effect in terms of reducing the investment in human capital, but, if it is run on a sufficiently small scale, this effect will not be strong enough to prevent a welfare improvement. If, on the other hand, the scale of the system is so large that parents bequeath some of their pensions to their children, it is overdrawn and creates unnecessarily strong disincentives for human capital investment.

Keywords: Fertility; Migration; Public Pensions; Social Security (search for similar items in EconPapers)
JEL-codes: H55 J13 J61 (search for similar items in EconPapers)
Date: 1998-11
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Citations: View citations in EconPapers (22)

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Related works:
Journal Article: The pay-as-you-go pension system as fertility insurance and an enforcement device (2004)
Working Paper: The pay-as-you-go pension system as fertility insurance and an enforcement device (2004)
Working Paper: The pay-as-you-go pension system as fertility insurance and an enforcement device (2004)
Working Paper: The Pay-as-you-go Pension System as a Fertility Insurance and Enforcement Device (1998)
Working Paper: The Pay-As-You-Go Pension System as a Fertility Insurance and Enforcement Device (1998)
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