Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/76652 
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper No. 1157
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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.
Subjects: 
pay-as-you-go pension
child benefits
fertility
externalities
JEL: 
H23
H55
J13
J18
Document Type: 
Working Paper
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