Are the social security benefits of pensions or child-care policies best financed by a consumption tax?

• Authors: Masatoshi Jinno , Masaya Yasuoka
• Languages of publication: EN

Abstracts

EN

Our paper sets an endogenous fertility model and examines how tax revenues derived from a consumption tax should be used for social security benefits such as pension and child-care policies. An additional pension financed by a consumption tax can achieve Pareto-improving allocations. Child allowances and an education subsidy decrease the older generation's utility because of tax burdens and the lack of additional benefit. Even if child allowances can raise the share of young people in society and some future generation's utility, that future generation's utility decreases because of a decrease in income growth. However, with certain parametric conditions, an education subsidy can raise every generation's utility, except for that of the older generation, because of the increase in income growth.

Keywords

EN

Endogenous fertility, human capital, child allowance, education subsidy, pension

• Publisher: Prague Development Center, Czech Republic
• Journal: Business and Economic Horizons
• Year: 2016
• Volume: 12
• Issue: 3
• Pages: 94-112

Dates

published

2016-10-20

Contributors

author

Masatoshi Jinno

• Shobi University, Japan

author

Masaya Yasuoka

• Kwansei Gakuin University, Japan

References

• Adema Y., Groezen B. van and Meijdam L., 2009. "Population ageing and the international capital Market," Netspar Panel Papers, Tilbrug University.
• Apps P. and Rees R., 2004. "Fertility, taxation and family policy," Scandinavian Journal of Economics, Vol.106(4), pp.745-763. https://doi.org/10.1111/j.0347-0520.2004.00386.x
• Becker G.S., Murphy K.M. and Tamura R., 1990. "Human capital, fertility, and economic growth," Journal of Political Economy, Vol.98(5-2), pp.S12-S37.
• Cremer H., Gahvari F. and Pestieau P. 2011. "Fertility, human capital accumulation, and the pension system," Journal of Public Economics, Vol.95, pp.1272-1279. https://doi.org/10.1016/j.jpubeco.2010.09.014
• Day C., 2012. "Economic growth, gender wage gap and fertility rebound," Economic Record, Vol.88, pp.88-99.
• https://doi.org/10.1111/j.1475-4932.2012.00799.x
• de la Croix D. and Doepke M., 2003. "Inequality and growth: Why differential fertility matters?" American Economic Review, Vol.93(4), pp.1091-1113. https://doi.org/10.1257/000282803769206214
• de la Croix D. and Doepke M., 2004. "Public versus private education when differential fertility matters," Journal of Development Economics, Vol.73, pp.607-629. https://doi.org/10.1016/j.jdeveco.2003.05.005
• Fanti L. and Gori L., 2009. "Population and neoclassical economic growth: A new child policy perspective," Economics Letters, Vol.104, pp.27-30. https://doi.org/10.1016/j.econlet.2009.03.014
• Ferrero M.D. and Iza A., 2004. "Skill premium effects on fertility and female labor force supply," Journal of Population Economics, Vol.17, pp.1-16. https://doi.org/10.1007/s00148-003-0150-5
• Galor O. and Weil N., 1996. "The gender gap, fertility, and growth," American Economic Review, Vol.86(3), pp.374-387.
• Glomm G. and Ravikumar B., 1992. "Public versus private investment in human capital: Endogenous growth and income inequality," Journal of Political Economy, Vol.100(4), pp.818-834. https://doi.org/10.1086/261841
• Groezen B. van, Leers T. and Meijdam L., 2003. "Social security and endogenous fertility: Pensions and child allowances as siamese twins," Journal of Public Economics, Vol.87, pp.233-251. https://doi.org/10.1016/S0047-2727(01)00134-7
• Groezen B. van and Meijdam L., 2008. "Growing old and staying young: Population policy in an ageing closed economy," Journal of Population Economics, Vol.21(3), pp.573-588. https://doi.org/10.1007/s00148-006-0067-x
• Hirazawa M. and Yakita A., 2009. "Fertility, child care outside the home, and Pay-As-You-Go social security," Journal of Population Economics, Vol.22(3), pp.565-583. https://doi.org/10.1007/s00148-007-0153-8
• Laroque G. and Salanie B., 2005. "Does fertility respond to financial incentives?," CEPR Discussion Paper Series, No. 5007. London: Center for Economic Policy Research.
• Lin S. and Tian X., 2003. "Population growth and social security financing," Journal of Population Economics, Vol.16, pp.91-110. https://doi.org/10.1007/s001480100111
• Meier V. and Wrede M., 2010. "Pensions, fertility, and education," Journal of Pension Economics and Finance, Vol.9(1), pp.75-93. https://doi.org/10.1017/S147474720800365X
• Nishimura K. and Zhang J., 1992. "Pay-As-You-Go public pensions with endogenous fertility," Journal of Public Economics, Vol.48(2), pp.239-258. https://doi.org/10.1016/0047-2727(92)90029-F
• Oshio T., 2001. "Reform in pension system and the fertility rate (in Japanese)," Quarterly of Social Security Research, Vol.36(4), pp.535-546.
• Oshio T. and Yasuoka M., 2009. "Maximum size of social security in a model of endogenous fertility," Economics Bulletin, Vol.29(2), pp.656-666.
• Peters W., 1995. "Public pensions, family allowances and endogenous demographic change," Journal of Population Economics, Vol.8, pp.161-183. https://doi.org/10.1007/BF00166650
• Sleebos, J.E., 2003. "Low fertility rates in OECD countries: Facts and policy responses," OECD Social, Employment and Migration Working Papers, No.15.
• Tamura R., 1994. "Fertility, human capital and the wealth of families," Economic Theory, Vol.4, pp.593-603. https://doi.org/10.1007/BF01213626
• Wigger B.U., 1999. "Pay-As-You-Go financed public pensions in a model of endogenous growth and fertility," Journal of Population Economics, Vol.12(4), pp.625-640. https://doi.org/10.1007/s001480050117
• Wigniolle B., 2002. "Fertility, intergenerational transfers and economic development," Journal of International Trade & Economic Development, Vol.11(3), pp.297-321. https://doi.org/10.1080/09638190210158593
• Yakita A., 2010. "Human capital accumulation, fertility and economic development," Journal of Economics, Vol.99(2), pp.97-116. https://doi.org/10.1007/s00712-009-0090-y
• Yasuoka M., 2006. "The Relationship between the fertility rate and tax policy (in Japanese)," Quarterly Journal of Social Security Research, Vol.42(1), pp.80-90.
• Yasuoka M. and Goto N., 2011. "Pension and child care policies with endogenous fertility," Economic Modelling, Vol.28(6), pp.2478-2482. https://doi.org/10.1016/j.econmod.2011.06.003
• Yasuoka, M. and Miyake A. 2010. "Change in the transition of fertility rate," Economics Letters, Vol.106(2), pp.78-80.
• https://doi.org/10.1016/j.econlet.2009.10.005
• Yasuoka M. and Miyake A., 2014. "Fertility rate and child care policies in a pension system," Economic Analysis and Policy, Vol.44(1), pp.122-127. https://doi.org/10.1016/j.eap.2014.01.007
• Zhang J., 1995. "Social security and endogenous growth," Journal of Public Economics, Vol.58, pp.185-213. https://doi.org/10.1016/0047-2727(94)01473-2
• Zhang J., 1997. "Fertility, growth and public investments in children," Canadian Journal of Economics, Vol.30(4a), pp.835-843. https://doi.org/10.2307/136272
• Zhang, J. and Casagrande R. 1998. "Fertility, growth, and flat-rate taxation for education subsidies," Economics Letters, Vol.60, pp.209-216. https://doi.org/10.1016/S0165-1765(98)00097-4
• Zhang J. and Zhang J. 1998. "Social security, intergenerational transfers, and endogenous growth," Canadian Journal of Economics, Vol.31(5), pp.1225-1241. https://doi.org/10.2307/136468
• Zhang J. and Zhang J. 2004. "How does social security affect economic growth? Evidence from Cross-Country Data," Journal of Population Economics, Vol.17, pp.473-500. https://doi.org/10.1007/s00148-004-0198-x
• Zhang J. and Zhang J. 2007. "Optimal social security in a dynastic model with investment externalities and endogenous fertility," Journal of Economic Dynamics & Control, Vol.31, pp.3545-3567. https://doi.org/10.1016/j.jedc.2006.12.005

Identifiers

DOI

http://dx.doi.org/10.15208/beh.2016.08