Abstract
The worldwide problem with pay-as-you-go, defined-benefits social security systems is not just financial. Through a dynamic, overlapping-generations model where forming a family and bearing and educating children are choice variables, we show that social security taxes and benefits generate incentives to reduce both family formation and fertility, and that these effects cannot be fully neutralized by counteracting inter-temporal or intergenerational transfers within families. We implement the model using calibrated simulations as well as panel data from 57 countries over 32 years. We find that PAYG tax measures account for a non-trivial part of the downward trends in family formation and fertility worldwide, especially in OECD countries.
Original language | English |
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Pages (from-to) | 55-77 |
Number of pages | 23 |
Journal | Review of Economic Dynamics |
Volume | 10 |
Issue number | 1 |
DOIs | |
Publication status | Published - 2007 Jan |
Keywords
- Divorce
- Family
- Fertility
- Growth
- Human capital
- Marriage
- Pay-as-you-go
- Public pension
- Saving
- Social security
ASJC Scopus subject areas
- Economics and Econometrics