Are Family Allowances and Fertility-related pensions Siamese Twins?

Fenge, Robert; Meier, Volker (2004): Are Family Allowances and Fertility-related pensions Siamese Twins? CESifo Working Paper, 1157

Abstract

This paper discusses alternative ways to deal with the positive externalities of having children in a pay-as-you-go pension system. Family allowances are compared to introducing a fertility-related component into the pension formula. In an endogenous labor supply setting, both instruments are shown to be equivalent if general pensions are of the Bismarckian contribution-related type. In contrast, if general pensions are of the Beveridgean flat-rate type, making pensions contingent on the number of children is generally preferable to family allowances because the latter creates a larger tax load on labor supply.

• Item Type: Paper (Discussion Paper)
• Faculties: Economics; Economics > Chairs > Chair for Public Economics
• Subjects: 300 Social sciences > 330 Economics
• Language: English