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The Costs of Increasing the Fertility Rate in an Endogenous Growth Model

Stauvermann, Peter J. and Ky, Sereyvath and Nam, Gi-Yu (2013): The Costs of Increasing the Fertility Rate in an Endogenous Growth Model.

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Abstract

In this paper, we apply an Overlapping Generations (OLG) model with endogenous fertility and a pay as you go (PAYG) pension system to find out what are the economic consequences of different policy measures to increase the number of children. Especially, we take into account the introduction of a child dependent PAYG pension system, child allowances financed by a labor income tax, and a reduction of the child rearing costs. Some authors have shown that in small open economies with exogenous growth it is possible to increase the fertility without harming any generation. Here we show that this is impossible in a model with endogenous growth.

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