Politics of Public Education and Pension Reform with Endogenous Fertility

Uchida, Yuki and Ono, Tetsuo (2022): Politics of Public Education and Pension Reform with Endogenous Fertility.

Abstract

We demonstrate the interaction between short-lived governments’ decisions on education and pension policies and parents’ decisions on fertility in an overlapping generations growth model. Our analysis shows that increased expected life expectancy lowers fertility, decreases the ratio of education expenditure to GDP, and increases the ratio of pension benefits to GDP as well as per capita GDP growth rate. We also consider a reform that reduces pension benefits designed by a long-lived planner and show that the reduction is optimal from a social welfare perspective when the planner gives a large weight to future generations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Fertility; Public Pension; Public Education; Probabilistic Voting; Overlapping Generations
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D70 - General; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H5 - National Government Expenditures and Related Policies > H52 - Government Expenditures and Education; H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions

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