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Takashi Oshio and Masaya Yasuoka
''Maximum size of social security in a model of endogenous fertility''
( 2009, Vol. 29 No.2 )
Social security tends to be unsustainable in nature. It reduces individuals'' demand for children as a measure to support their lifestyle during old age, which in turn undermines the financial basis of social security. Using a simple overlapping generations model with endogenous fertility and income transfer from children to parents, we discuss the maximum size of a pay-as-you-go social security program that can prevent a cumulative reduction of fertility and make a program sustainable. We also show that a child-care allowance raises the maximum size of the program and raises an individual''s lifetime utility.
Keywords: social security, fertility, intergenerational income transfer
JEL: H3 - Fiscal Policies and Behavior of Economic Agents: General
H5 - National Government Expenditures and Related Policies National Government Expenditures and Related Policies: General
Manuscript Received : Apr 18 2009 Manuscript Accepted : Apr 25 2009

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