Pay-As-You-Go Pension, Bargaining Power, and Fertility

The effects of pension policies on fertility have been examined in the overlappinggenerations (OLG) model of the unitary household in which no heterogeneity exists between wife and husband. This study departs from the OLG model to focus on marital bargaining arising from heterogeneity in a nonunitar...

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Bibliographic Details
Published in:Finanzarchiv 2018-06, Vol.74 (2), p.235-259
Main Authors: Komura, Mizuki, Ogawa, Hikaru
Format: Article
Language:English
Subjects:
Balance of power
Bargaining
Couples
Decision making
Earnings
Economic models
Empowerment
Fertility
Gender differences
Heterogeneity
Households
Husbands
Income distribution
Income redistribution
Industrialized nations
Life expectancy
Pensions
Power
Social norms
Wives
Women
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Summary:The effects of pension policies on fertility have been examined in the overlappinggenerations (OLG) model of the unitary household in which no heterogeneity exists between wife and husband. This study departs from the OLG model to focus on marital bargaining arising from heterogeneity in a nonunitary model. Specifically, this paper examines how pension policies affect the fertility of a bargaining couple with different life spans. The analysis reveals a new channel from pension policies to fertility decisions, whereby an increase in pension size affects fertility not only via the changes in current and future income but also through a change in marital bargaining power. This result suggests that an increase in a pay-as-you-go pension may induce a negative effect on fertility through women's empowerment.
ISSN:0015-2218
1614-0974
DOI:10.1628/fa-2018-0003