Rizzo, Giuseppe (2009): Fertility and pension systems.
Download (195kB) | Preview
In the last century, state pension systems have been introduced in most countries, and since then their size has been significantly increasing. A broad literature has studied this phenomenon, developing models that explain why pension systems exist and have been continuously expanding. At the same time, many authors have suggested that pension systems may substitute children as old-age economic security, discouraging fertility. In particular, this fact may explain the contemporaneity of the expansion of pension systems with the urbanization and industrialization processes. These two processes, in fact, have contributed to the weakening of family ties, which in turn results in the need for additional old-age economic security. In the political economy research these effects have been ignored, as the fertility choice is usually considered exogenous. This paper suggests a model that takes into account this endogenous effect and tries to analyze the net effect of the breakdown of family ties on the dimension of pension systems. The last section presents some empirical results supporting the theoretical model. The main result is that the transition toward the weak family does not necessarily imply an increase in the size of pension systems, because as the family structure becomes weaker the fertility decreases, thus reducing the profitability of the scheme: as the weak families start to increase, there could be an increase in the size of the pension system, but as they become the majority, the fertility rate may become too low, and the political support for the pension system may decrease.
|Item Type:||MPRA Paper|
|Original Title:||Fertility and pension systems|
|Keywords:||Family economics; Fertility; Political sustainability; Social security; Voting|
|Subjects:||J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility ; Family Planning ; Child Care ; Children ; Youth
J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly ; Economics of the Handicapped ; Non-Labor Market Discrimination
H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
|Depositing User:||Giuseppe Rizzo|
|Date Deposited:||26. Jan 2009 12:21|
|Last Modified:||11. Feb 2013 23:38|
Aaron, H., 1966. The social insurance paradox. Canadian Journal of Economics and Political Science 32, 371-374.
Barro, R. J., Becker, G. S., 1989. Fertility choice in a model of economic-growth. Econometrica 57, 481-501.
Becker, G. S., Barro, R. J., 1988. A reformulation of the economic-theory of fertility. Quarterly Journal Of Economics 103, 1-25.
Becker, G. S., Lewis, H. G., 1973. On the interaction between the quantity and quality of children. Journal of Political Economy 81, S279-88.
Boldrin, M., Jones, L. E., 2002. Mortality, fertility, and saving in a malthusian economy. Review of Economic Dynamics 5, 775-814.
Boldrin, M., Rustichini, A., 2000. Political equilibria with social security. Review of Economic Dynamics 3, 41-78.
Breyer, F., 1994. The political economy of intergenerational redistribution. European Journal of Political Economy 10, 61-84.
Browning, E. K., 1975. Why social insurance budget is too large in a democracy. Economic Inquiry 13, 373-388.
Caldwell, J. C., 1976. Toward a restatement of demographic transition theory. Population and Development Review 2, 321-366.
Caldwell, J. C., 1978. A theory of fertility: From high plateau to destabilization. Population and Development Review 4, 553-577.
Casamatta, G., Cremer, H., Pestieau, P., 2000. The political economy of social security. Scandinavian Journal Of Economics 102, 503-522.
Caucutt, E. M., Cooley, T. F., Guner, N., 2007. The farm, the city, and the emergence of social security. Working Paper 12854, National Bureau of Economic Research.
Cigno, A., Rosati, F. C., 1992. The effects of financial markets and social security on saving and fertility behaviour in italy. Journal of Population Economics 5, 319-41.
Cooley, T. F., Soares, J., 1999. A positive theory of social security based on reputation. Journal Of Political Economy 107, 135-160.
Cukierman, A., Meltzer, A. H., 1989. A political theory of government debt and deficits in a neo-ricardian framework. American Economic Review 79, 713-732.
de Walque, G., 2005. Voting on pensions: A survey. Journal Of Economic Surveys 19, 181-209.
Diamond, P. A., 1965. National debt in a neoclassical growth model. American Economic Review 55, 1126-1150.
Galasso, V., Profeta, P., 2002. The political economy of social security: a survey. European Journal of Political Economy 18, 1-29.
Hansson, I., Stuart, C., 1989. Social security as trade among living generations. American Economic Review 79, 1182-95.
Kalemli-Ozcan, S., 2002. Does the mortality decline promote economic growth? Journal of Economic Growth 7, 411-439.
Leibenstein, H., 1957. Economic backwardness and economic growth. Wiley, New York (NY).
Samuelson, P. A., 1958. An exact consumption-loan model of interest with or without the social contrivance of money. Journal of Political Economy 66, 467-482.
Tabellini, G., 1991. The politics of intergenerational redistribution. Journal of Political Economy 99, 335-57.
Available Versions of this Item
- Fertility and pension systems. (deposited 26. Jan 2009 12:21) [Currently Displayed]