Pensions and Fertility Incentives

28 Pages Posted: 10 Mar 2003

See all articles by Robert Fenge

Robert Fenge

CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Ifo Institute for Economic Research at the University of Munich

Volker Meier

CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Ifo Institute for Economic Research at the University of Munich

Date Written: February 2003

Abstract

This paper discusses the efficiency of a pay-as-you-go pension reform by introducing a child benefit in an endogenous fertility setting. In the model of a small open economy, higher fertility is associated with a reduction of lifetime labor supply. The optimum share of fertility-related pensions is always below unity, but generally positive. The former is true since individuals do not take into account the impact of their labor supply choice on the parent generation. It is demonstrated that child allowances are equivalent to fertility-related pensions as instruments to achieve an efficient allocation.

Keywords: Public Pensions, Pay-as-you-go, Fertility, Externalities

JEL Classification: H23, H55, J13, J18

Suggested Citation

Fenge, Robert and Meier, Volker, Pensions and Fertility Incentives (February 2003). Available at SSRN: https://ssrn.com/abstract=385783 or http://dx.doi.org/10.2139/ssrn.385783

Robert Fenge (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research) ( email )

Poschingerstr. 5
81679 Munich
Germany

Ifo Institute for Economic Research at the University of Munich ( email )

Poschingerstr. 5
Munich
Germany

Volker Meier

CESifo (Center for Economic Studies and Ifo Institute for Economic Research) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Ifo Institute for Economic Research at the University of Munich ( email )

Poschingerstr. 5
Munich
Germany

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