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

Abstract

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.

Do Social Pensions Affect the Physical and Mental Health of Rural Children in China? An Intergenerational Care Perspective

“…We found that receipt of the NRP in rural families had positive and significant impacts on the physical health level of children, in that it can greatly decrease the number of medical visits. This echoed other studies regarding the value and impact of social pensions on child health in China [ 34 ] and in other countries [ 17 , 18 , 45 ], demonstrating the vital role that social pensions play in the physical health of family members other than the receiver. The reason for this is that, when the rural elderly receive the NRP—which can be regarded as an additional source of family income [ 65 ]—their labor burden is reduced and their daily leisure time is increased [ 43 ].…”

“…However, research on the effects of social pensions on the health of grandchildren remains limited. Although recent studies [ 17 , 18 ] have begun to pay attention to the relationship between social pensions and elderly’s grandchildren’s physical health, the findings of these studies need further verification. Moreover, the effects of social pensions on elderly’s grandchildren’s mental health have been largely ignored, thus calling for more investigation.…”

Human capital and pensions with endogenous fertility and retirement

“…These scenarios were chosen because they are reminiscent of some of the principal policies that have been put into place over the past few years by various governments with the aim of reinforcing the financial sustainability of their respective pension systems. In fact, over the past two decades, the majority of OECD countries have raised the retirement age as a common reform (see Cipriani and Fioroni, 2022). Moreover, reducing incentives to retire early and rewarding employment at an older age to increase retirement age, have been put in place by various countries (OECD, 2019b).…”

“…Overall, these models focus on fertility and education policies, but do not consider retirement choices and therefore ignore the interaction between child policies and those devoted to increasing labour supply in old age. We add to this literature by extending the framework developed by Cipriani and Fioroni (2022) to include investment in human capital. To the best of our knowledge, no study to date has analyzed the optimal policies that aim to attain the first-best allocation and their welfare implications in a PAYG pension system with elderly labour supply and both endogenous education and fertility.…”

Funded Pension Schemes in Aging Societies: A Pure Economic Argument?

“…We expand previous overlapping generations (OLG) models [17] by including debt. The consideration of cycle government debt obligates the central planner to make sure that future generations will not be used as a heavy tax source.…”