Pension Design When Fertility Fluctuates: The Role of Capital Mobility and Education Financing

This study compares alternative designs of an unfunded pension system. Convex combinations between a fixed contribution rate and a fixed benefit rate are considered. The objective is to maximize the expected ex-ante welfare under stochastic fertility. The model is a three-period CGE framework where the design of the education system and effects on factor prices are accounted for. The effects on factor prices depend on the degree of capital mobility. For low degrees of capital mobility it is optimal to have a fixed benefit rate in the pension system. But for the small open economy, a fixed contribution rate is optimal if the education system has a fixed benefit rate. This design of education and pension systems assures that individuals in the small open economy are unaffected by fertility fluctuations.

[1]  R. Filer,et al.  Endogenous Pensions and Retirement Behavior , 2005, SSRN Electronic Journal.

[2]  A. Sousa-Poza,et al.  Early Retirement: Free Choice or Forced Decision? , 2005, SSRN Electronic Journal.

[3]  Laurence J. Kotlikoff,et al.  The Role of Intergenerational Transfers in Aggregate Capital Accumulation , 1980, Journal of Political Economy.

[4]  O. Straume,et al.  Can Deunionization Lead to International Outsourcing? , 2005, SSRN Electronic Journal.

[5]  H. Bohn.  Social Security and Demographic Uncertainty: the Risk Sharing Properties of Alternative Policies , 1999 .

[6]  R. MacDonald,et al.  Trade Costs, Trade Balances and Current Accounts: An Application of Gravity to Multilateral Trade , 2005, SSRN Electronic Journal.

[7]  A. Glazer,et al.  The Desire for Impact , 2005, SSRN Electronic Journal.

[8]  Annalisa Luporini,et al.  Ownership Concentration, Monitoring and Optimal Board Structure , 2005, SSRN Electronic Journal.

[9]  Paul de Bijl.  Structural Separation and Access in Telecommunications Markets , 2004 .

[10]  Kenneth Rogoff,et al.  The Six Major Puzzles in International Macroeconomics: Is There a Common Cause? , 2000, NBER Macroeconomics Annual.

[11]  Yu-Fu Chen,et al.  Product Market Competition, Investment and Employment-Abundant Versus Job-Poor Growth: A Real Options Perspective , 2005, SSRN Electronic Journal.

[12]  M. Gérard.  Multijurisdictional Firms and Governments' Strategies Under Alternative Tax Designs , 2005, SSRN Electronic Journal.

[13]  J. de Haan,et al.  Has the Stability and Growth Pact Impeded Political Budget Cycles in the European Union? , 2005, SSRN Electronic Journal.

[14]  R. Pethig,et al.  Nonlinear Production, Abatement, Pollution and Materials Balance Reconsidered , 2005, SSRN Electronic Journal.

[15]  Piotr Wdowinski,et al.  Financial Markets and Economic Growth in Poland: Simulations with an Econometric Model , 2005, Social Science Research Network.

[16]  J. Poterba,et al.  An aging society: opportunity or challenge? , 1990, Brookings papers on economic activity.

[17]  M. Augusztinovics.  CHAPTER 4 PENSION SYSTEMS AND REFORMS IN THE TRANSITION ECONOMIES , 1999 .

[18]  Dan Kovenock,et al.  Equilibrium and efficiency in the tug-of-war , 2019 .

[19]  W. Peters,et al.  Justifying the Lindahl solution as an outcome of fair cooperation , 2005, SSRN Electronic Journal.

[20]  Rick van der Ploeg.  The Making of Cultural Policy: A European Perspective , 2005, SSRN Electronic Journal.

[21]  Ben Lockwood,et al.  Decentralization and Electoral Accountability: Incentives, Separation and Voter Welfare , 2005 .

[22]  Volker Grossmann,et al.  Distribution of Natural Resources, Entrepreneurship, and Economic Development: Growth Dynamics with Two Elites , 2005, SSRN Electronic Journal.

[23]  Peter A. Zadrozny,et al.  Estimated U.S. Manufacturing Production Capital and Technology Based on an Estimated Dynamic Economic Model , 2005, SSRN Electronic Journal.

[24]  Alasdair Smith.  Intergenerational transfers as social insurance , 1982 .

[25]  A. Wagener.  Pensions as a portfolio problem: fixed contribution rates vs. fixed replacement rates reconsidered , 2003 .

[26]  Paul De Grauwe,et al.  Non-Linearities in the Relation between the Exchange Rate and its Fundamentals , 2005, SSRN Electronic Journal.

[27]  G. Glomm,et al.  Public Pensions and Capital Accumulation: The Case of Brazil , 2005, SSRN Electronic Journal.

[28]  N. Mankiw,et al.  Intergenerational Risk Sharing in the Spirit of Arrow, Debreu, and Rawls, with Applications to Social Security Design , 2001, Journal of Political Economy.

[29]  Panu Poutvaara.  Social Security Incentives, Human Capital Investment and Mobility of Labor , 2005, SSRN Electronic Journal.

[30]  M. Funke,et al.  Drifting together or falling apart? The empirics of regional economic growth in post-unification Germany , 2005, SSRN Electronic Journal.

[31]  Saku Aura,et al.  Optimal Commodity Taxation When Land and Structures Must Be Taxed at the Same Rate , 2005 .

[32]  David Card,et al.  Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States , 1990, Journal of Political Economy.

[33]  Antonio Rangel.  Forward and Backward Intergenerational Goods: Why Is Social Security Good for the Environment? , 2003 .

[34]  M. Wrede,et al.  Pension, Fertility, and Education , 2005, SSRN Electronic Journal.

[35]  T. Eichner,et al.  A MICRO‐LEVEL ‘CONSUMER APPROACH’ TO SPECIES POPULATION DYNAMICS , 2005, SSRN Electronic Journal.

[36]  Ludger Woessmann,et al.  Education Policy and Equality of Opportunity , 2005, SSRN Electronic Journal.

[37]  Kurt R. Brekke,et al.  Gatekeeping in Health Care , 2005, Journal of health economics.

[38]  David S. Evans,et al.  Curing Sinus Headaches and Tying Law: An Empirical Analysis of Bundling Decongestants and Pain Relievers , 2005, SSRN Electronic Journal.

[39]  Til Schuermann,et al.  Firm Heterogeneity and Credit Risk Diversification , 2005, SSRN Electronic Journal.

[40]  Michael Pfaffermayr,et al.  Small Sample Properties of Maximum Likelihood Versus Generalized Method of Moments Based Tests for Spatially Autocorrelated Errors , 2005, SSRN Electronic Journal.

[41]  Marc Schramm,et al.  Putting New Economic Geography to the Test: Free-Ness of Trade and Agglomeration in the EU Regions , 2005, SSRN Electronic Journal.

[42]  M. Boldrin,et al.  The Intergenerational State: Education and Pensions , 2002 .

[43]  Christian Habermann,et al.  Risk Sharing and Efficiency Implications of Progressive Pension Arrangements , 2005, SSRN Electronic Journal.

[44]  Jovan Žamac.  Winners and Losers from a Demographic Shock under Different Intergenerational Transfer Schemes , 2005 .

[45]  Stefan C. Wolter,et al.  Demographic Change and Public Education Spending: A Conflict between Young and Old? , 2005, SSRN Electronic Journal.

[46]  Lars P. Feld,et al.  Strategic Tax Competition in Switzerland: Evidence from a Panel of the Swiss Cantons , 2005, SSRN Electronic Journal.

[47]  H. Verbon,et al.  The international spillover effects of pension reform , 2005, SSRN Electronic Journal.

[48]  Antonis Adam,et al.  Turkish Delight for Some, Cold Turkey for Others?: The Effects of the Eu-Turkey Customs Union , 2005, SSRN Electronic Journal.

[49]  Øystein Thøgersen.  A note on intergenerational risk sharing and the design of pay-as-you-go pension programs , 1998, Journal of population economics.

[50]  C. Keuschnigg,et al.  A growth oriented dual income tax , 2005, SSRN Electronic Journal.

[51]  A. Glazer,et al.  Subsidizing Enjoyable Education , 2005, SSRN Electronic Journal.

[52]  K. Holden,et al.  Assessing the maintenance of savings sufficiency over the first decade of retirement , 2005, SSRN Electronic Journal.

[53]  Marc Schramm,et al.  Looking for Multiple Equilibria When Geography Matters: German City Growth and the Wwii Shock , 2005, SSRN Electronic Journal.

[54]  Peter Rangazas.  The Quantity and Quality of Schooling and U.S. Labor Productivity Growth (1870-2000) , 2002 .

[55]  Kai A. Konrad,et al.  Succession Rules and Leadership Rents , 2005, SSRN Electronic Journal.

[56]  David Martimort,et al.  Monitoring a Common Agent: Implications for Financial Contracting , 2005, J. Econ. Theory.

[57]  Jakob de Haan,et al.  Trade and Business Cycle Synchronization in OECD Countries: A Re-Examination , 2005, SSRN Electronic Journal.

[58]  Kevin M. Murphy,et al.  The Family and the State , 1988, The Journal of Law and Economics.

[59]  Laurence J. Kotlikoff,et al.  Dynamic Fiscal Policy , 1988 .

[60]  L. Danziger.  Output Effects of Inflation with Fixed Price- and Quantity-Adjustment Costs , 2005, SSRN Electronic Journal.

[61]  A. Lindbeck.  Pensions and Contemporary Socioeconomic Change , 2000 .

[62]  H. Gersbach,et al.  Self-Financing Environmental Mechanisms , 2005, SSRN Electronic Journal.

[63]  Robert J. Gary-Bobo,et al.  Sharing Budgetary Austerity Under Free Mobility and Asymmetric Information: An Optimal Regulation Approach to Fiscal Federalism , 2005, SSRN Electronic Journal.

[64]  Silke Uebelmesser,et al.  Migration and the welfare state: The economic power of the non-voter? , 2005, SSRN Electronic Journal.

[65]  A. Wagener.  On Intergenerational Risk Sharing within Social Security Schemes , 2001, SSRN Electronic Journal.

[66]  A. Lindbeck,et al.  Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems , 1997 .

[67]  Jörg Breitung,et al.  Unit Roots and Cointegration in Panels , 2005, SSRN Electronic Journal.

[68]  Andreas Haufler,et al.  Merger Policy to Promote 'Global Players'? A Simple Model , 2005, SSRN Electronic Journal.

[69]  R. Disney.  Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel , 2005, SSRN Electronic Journal.

[70]  P. Pestieau,et al.  Pay-as-you-go social security in a changing environment , 1991, Journal of population economics.

[71]  R. MacDonald,et al.  Non-Linear Exchange Rate Dynamics in Target Zones: A Bumpy Road Towards a Honeymoon - Some Evidence from the Erm, Erm2 and Selected New EU Member States , 2005, SSRN Electronic Journal.

[72]  M. Beine,et al.  The Impact of FX Central Bank Intervention in a Noise Trading Framework , 2005, SSRN Electronic Journal.

[73]  P. Sørensen.  Dual Income Taxation: Why and How? , 2005, SSRN Electronic Journal.

[74]  A. Kemnitz.  Can Immigrant Employment Alleviate the Demographic Burden? The Role of Union Centralization , 2005, SSRN Electronic Journal.