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

Hans-Werner Sinn

No 2023, CEPR Discussion Papers from Centre for Economic Policy Research

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
References: Add references at CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2023 (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:2023

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=2023

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().