IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20020021.html
   My bibliography  Save this paper

The Sustainability of the Pay-as-you-go System with Falling Birth Rates

Author

Listed:
  • Bernard M.S. van Praag

    (University of Amsterdam)

  • Pedro Cardoso

    (University of Amsterdam)

Abstract

A model is presented that explains the mix between funded and unfunded pension systems. It turns out that total pension and the relative shares of the two systems may be explained and are determined by the population growth rate, technological growth, the time-preference discount rate, the relative risk aversion, the production function, and the degree of altruism. A fall in the population growth rate, even to negative values, will imply a reduction of the interest rate and an increase in the capital-output ratio, while the pension system will shift to more funding. A fall in the population growth rate will result in a reduction of average welfare and an increase in the income inequality between workers and retired people/individuals.

Suggested Citation

  • Bernard M.S. van Praag & Pedro Cardoso, 2002. "The Sustainability of the Pay-as-you-go System with Falling Birth Rates," Tinbergen Institute Discussion Papers 02-021/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20020021
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/02021.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Old-age pensions; pay-as-you-go; intergenerational transfers; retirement benefits; altruism;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20020021. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.