Year: 2024
Type: article
Abstract: This paper presents an analysis of the effects of public old-age support on individuals’ fertility decisions and on the long-term equilibrium in an overlapping generation economy with strategic bequest motives. Parents must pay their adult children at least the reservation wage to receive informal old-age support from them (individual rationality constraint). Formal old-age support is financed through wage taxes on children. The increased present value of formal old-age support tends to increase old-age utility, thereby decreasing the family support demand and decreasing savings for the old age. The increased wage tax reduces the opportunity cost of child-rearing time, thereby increasing the fertility rate. The effects of increased formal old-age support on per-worker capital and labor are indeterminate, as is the effect on the long-term lifetime utility of individuals. A strategic bequest motive might engender a higher fertility rate than that of the social optimum.
Source: Journal of Population Economics
Author: Akira Yakita
Institution: Nagoya City University
Language: English
Subfield: Gender Studies
Field: Social Sciences
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,090
Award: G916634937
OpenAlex ID: W4394976774