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

Hans-Werner Sinn

No 6610, NBER Working Papers from National Bureau of Economic Research, Inc

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 kid' who are unwilling to pay their parents a pension. It is true that the system has amoral 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 strong enough to prevent a welfare improvement. If scale of the system is so large that parents bequeath some of their pensions to their children overdrawn and creates unnecessarily strong disincentives for human capital investment.

JEL-codes: H55 J61 (search for similar items in EconPapers)
Date: 1998-06
New Economics Papers: this item is included in nep-pub
Note: PE
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Citations: View citations in EconPapers (37)

Published as Sinn, Hans-Werner. "The Pay-as-You-Go Pension System As Fertility Insurance And An Enforcement Device," Journal of Public Economics, 2004, v88(7-8,Jul), 1335-1357.

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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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