Reference : Stochastic Fertility, Moral Hazard, and the Design of Pay-As-You-Go Pension Plans
Scientific journals : Article
Business & economic sciences : Economic systems & public economics
http://hdl.handle.net/2268/118993
Stochastic Fertility, Moral Hazard, and the Design of Pay-As-You-Go Pension Plans
English
Pestieau, Pierre mailto [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg > HEC-Ecole de gestion de l'ULg >]
Cremer, H., Gahvari, F. [ > > ]
2011
CESifo Economic Studies
57
2
332–348
Yes
International
[en] pay-as-you-go social security ; stochastic fertility ; moral hazard
[en] This article models a two-period overlapping generations economy in the steady state
where the realization of the quantity/quality number of children depends on an initial investment
in children and on a random shock. It shows that the implementation of the first-best
allocation, in which the effort level is publicly observable, requires a subsidy on the investment
in children. There should also be full insurance with respect to second-period consumption
and pensions must be invariant to the number of children. On the other hand, when investment is unobservable and one cannot subsidize it, the full insurance property
goes away. In this case, pensions must be linked positively to the number of children.
http://hdl.handle.net/2268/118993

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