Social security and endogenous demographic change: child support and retirement policies

This paper studies retirement and child support policies in a small, open, overlapping-generations economy with PAYG social security and endogenous retirement and fertility decisions. It demonstrates that neither fertility nor retirement choices necessarily coincide with socially optimal allocation,...

Full description

Saved in:
Bibliographic Details
Published in:Journal of pension economics & finance 2022-07, Vol.21 (3), p.307-325
Main Authors: Cipriani, Giam Pietro, Fioroni, Tamara
Format: Article
Language:English
Subjects:
Age
Allocation
Child support
Children & youth
Demographic change
Economics
Endogenous
Equilibrium
Externality
Fertility
Labor force
Labor productivity
Labor supply
Life expectancy
Market economies
Older people
Pensions
Retirement
Retirement policies
Security systems
Social security
Social security taxes
Subsidies
Sustainability
Tax increases
Tax revenues
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper studies retirement and child support policies in a small, open, overlapping-generations economy with PAYG social security and endogenous retirement and fertility decisions. It demonstrates that neither fertility nor retirement choices necessarily coincide with socially optimal allocation, because agents do not take into account the externalities of fertility and the elderly labor supply in the economy as a whole. It shows that governments can realize the first-best allocation by introducing a child allowance scheme and a subsidy to incentivize the labor supply of older workers. As an alternative to subsidizing the elderly labor supply, we show that the first-best allocation can also be achieved by controlling the retirement age. Finally, the model is simulated in order to study whether the policies devoted to realizing the social optimum in a market economy could be a Pareto improvement.
ISSN:1474-7472
1475-3022
DOI:10.1017/S1474747220000402