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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 02-021/3

Classification and Topics

• Classification: Wirtschaft ; Social Security and Public Pensions ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Altruism; Philanthropy; Intergenerational Transfers ; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination ; Retirement; Retirement Policies
• Subject: Old-age pensions ; pay-as-you-go ; intergenerational transfers ; retirement benefits ; altruism ; Umlageverfahren ; Intergenerationale Übertragung ; Altruismus ; Altersvorsorge ; Fertilität

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): van Praag, Bernard M.S. ; Cardoso, Pedro
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/85771
• Last update: 10.03.2025, 11:43 AM CET