Fertility Policies and Social Security Reforms in China

Nicolas Coeurdacier, Stéphane Guibaud () and Keyu Jin
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Stéphane Guibaud: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Keyu Jin: LSE - London School of Economics and Political Science

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Abstract: This paper analyzes the impact of relaxing fertility controls and expanding social security in China. We develop an overlapping generations model in which fertility decisions and capital accumulation are endogenously determined in the presence of social security. In our model, children are an alternative savings technology—as they transfer resources to their retired parents. Important feedback links arise between fertility and social security variables: an expansion of social security benefits reduces fertility—partially offsetting the effects of relaxing the one-child policy. The feedback loop between social security variables and fertility suggests that abandoning fertility restrictions may not be as effective in helping to finance China's intended pension reform, especially if children are an important source of old-age support. The sustainability of the pension system is particularly at risk in the event of a growth slowdown. The objective of pension reforms may also be incongruent with other reforms, such as financial liberalization and financial integration.

Keywords: one-child policy; social security; demographics (search for similar items in EconPapers)
Date: 2014-10
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03393018
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Published in IMF Economic Review, 2014, 62 (3), pp.371 - 408. ⟨10.1057/imfer.2014.19⟩

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Journal Article: Fertility Policies and Social Security Reforms in China (2014)
Working Paper: Fertility policies and social security reforms in China (2014)
Working Paper: Fertility Policies and Social Security Reforms in China (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03393018

DOI: 10.1057/imfer.2014.19

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