Qualitative und quantitative Aspekte einer Elternrente

Michael Voigtländer

No 02/2005, Otto-Wolff-Institut Discussion Paper Series from Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland

Abstract: On efficiency grounds, a social contract can be justified if not only pension payments but also the funding of education is taken into account. By introducing a pay-as-you system, which is a type of implicit social contract, each young generation can overcome its liquidity problems with regards to the financing of education and each older generation gains an attractive investment opportunity as funding human capital offers high returns and allows for an additional diversification of risks. As the marginal returns to education are decreasing, however, pension entitlements should be made contingent on educational investments and on the number of children. Given the tax-financed provision of education in Germany, especially the introduction of child pensions promises efficiency gains for the statutory pension systems. Additionally, it is shown how child pensions can be quantified. With reference to the concept of fiscal returns to education a relationship between child-rearing, education and income can be established. As the calculations suggest, one third of all pension entitlements in the German statutory pension scheme should be granted according to the number of children. Finally, the article shows how the institutional setting of the German pension system has to be changed in order to implement a child pension.

Keywords: pension reform; child pensions; returns to education (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Date: 2005-07
New Economics Papers: this item is included in nep-edu and nep-pbe
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Chapter: Qualitative und quantitative Aspekte einer Elternrente? (2005)
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