Internalizing fertility and education externalities on capital returns

Dávila, Julio

doi:10.1007/s00199-017-1062-z

Cited by 8 publications

(7 citation statements)

References 18 publications

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“…As noted byDávila (2018) given this budget constraint the social planner could in principle choose a high enough fertility to sustain an unbounded inflow of capital from abroad thus making the budget constraint not convex and the maximization problem undefined. Thus to rule out Ponzi games, which would also be incompatible with a small open economy assumption(Kolmar, 1997), we assume the following no-Ponzi-scheme condition on foreign debt holds:lim T →∞ 1 1 + r T d T +1 T t=0 n t ≤ 0(5)…”

mentioning

confidence: 99%

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

Cipriani

Fioroni

2021

Journal of Pension Economics and Finance

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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.

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confidence: 99%

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

Cipriani

Fioroni

2021

Journal of Pension Economics and Finance

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“…5 As noted by Dávila (2018) given this budget constraint the social planner could in principle choose a high enough fertility to sustain an unbounded inflow of capital from abroad thus making the budget constraint not convex and the maximization problem undefined. Thus to rule out Ponzi games, which would also be incompatible with a small open economy assumption (Kolmar, 1997), we assume the following no-Ponzi-scheme condition on foreign debt holds:…”

Section: The First-best Solutionmentioning

confidence: 99%

Social Security and Endogenous Demographic Change: Child Support and Retirement Policies

Cipriani

Fioroni

2021

SSRN Journal

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“…Thus, the existence of the optimal steady-state as well as it being the unique allocation satisfying first-order conditions for optimality is not always a given, and, we need to assume that. Other papers have also shown the sufficiency of the first-order conditions under certain assumptions on functional forms in their framework, see, for example, Dávila (2018) and Abio et al (2004).…”

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confidence: 99%

Pension, possible phaseout, and endogenous fertility in general equilibrium

Amol

Bishnu

Ray

2022

J Public Economic Theory

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The rich literature on Pay‐As‐You‐Go (PAYG)‐type pensions provides a notion that when pension return is dominated by the market return, generally it is impossible to phase pension out without hurting any generation. We show that PAYG pensions can indeed be phased out in a much richer framework where fertility is endogenous and general equilibrium effects are present. Interestingly, the factor that helps us to phase the pension out in a Pareto way is hidden in the structure of PAYG pension itself. Individualistic agents fail to recognize the benefits of their fertility decision on these programs and, therefore, end up in an allocation that is strictly dominated by the allocations that internalize this externality. Exploiting this positive externality, competitive economy can improve its allocations and can reach the planner's steady‐state in finite time where each generation secures as much utility as in the competitive equilibrium. Clearly, it is possible to transition in a Pareto way to an economy either with no pension or with pensions whose return is not dominated by market return.

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Internalizing fertility and education externalities on capital returns

Cited by 8 publications

References 18 publications

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

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

Social Security and Endogenous Demographic Change: Child Support and Retirement Policies

Pension, possible phaseout, and endogenous fertility in general equilibrium

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