Reducing the excess burden of subsidizing the stork: joint taxation, individual taxation, and family tax splitting

Analyzing a homogenous household setting with endogenous fertility and endogenous labor supply, we demonstrate that moving from joint taxation to individual taxation and adapting child benefits so as to keep fertility constant entails a Pareto improvement. The change is associated with an increase in labor supply and consumption and a reduction of the marginal income tax, while the child benefit may move in either direction. Similarly, a move from joint taxation to some scheme of family tax splitting increases labor supply and welfare.     

On high fertility rates in developing countries: birth limits, birth taxes, or education subsidies?

In this paper, we consider two types of population policies observed in practice: birth limits and birth taxes. We find that both achieve very similar equilibrium solutions if tax revenue finances lump-sum transfers. By reducing fertility and promoting growth, both birth policies may achieve higher welfare than conventional education subsidies financed by income taxes. A birth tax for education subsidies can achieve the first-best solution. The welfare gain of the first-best policy may be equivalent to a massive 10–50% rise in income, depending on the degree of human capital externalities and the elasticity of intertemporal substitution.      

Endogenous fertility and human capital in a Schumpeterian growth model

This study develops a scale-invariant Schumpeterian growth model with endogenous fertility and human capital accumulation. The model features two engines of long-run economic growth: R&D-based innovation and human capital accumulation. One novelty of this study is endogenous fertility, which negatively affects the growth rate of human capital. Given this growth-theoretic framework, we characterize the dynamics of the model and derive comparative statics of the equilibrium growth rates with respect to structural parameters. As for policy implications, we analyze how patent policy affects economic growth through technological progress, human capital accumulation, and endogenous fertility. In summary, we find that strengthening patent protection has (a) a positive effect on technological progress, (b) a negative effect on human capital accumulation through a higher rate of fertility, and (c) an ambiguous overall effect on economic growth.     

养老保险现收现付制的挤出效应——一个内生生育率模型

文章在一个内生经济增长的OLG模型框架下研究现收现付制养老保险计划的挤出效应。具体考察公共养老金税率变动对家庭的消费与储蓄、生育选择以及经济增长的长期影响。结果表明,存在向上利他动机的情况下,挤出效应的大小取决于养老基金的规模,适度规模的公共养老金计划不会挤出私人储蓄。而有利于消费增加与经济增长;较大规模的公共养老金计划会对私人自愿储蓄与消费产生负面影响,并且对储蓄的挤出作用要大于对消费的挤出。人口老龄化进程在一定程度上缓解挤出效应,促进资本积累与经济增长。     

Endogenous fertility,endogenous lifetime and economic growth: the role of child policies

We examine the effects of child policies on both transitional dynamics and long-term demo-economic outcomes in an overlapping-generations neoclassical growth model à la Chakraborty (J Econ Theory 116(1):119–137, 2004) extended with endogenous fertility under the assumption of weak altruism towards children. The government invests in public health, and an individual’s survival probability at the end of youth depends on health expenditure. We show that multiple development regimes can exist. However, poverty or prosperity does not necessarily depend on the initial conditions, since they are the result of how a child policy is designed. A child tax, for example, can be used effectively to enable those economies that were entrapped in poverty to prosper. There is also a long-term welfare-maximising level of the child tax. We show that a child tax can be used to increase capital accumulation, escape from poverty and maximise long-term welfare also when (a) a public pay-as-you-go pension system is in place and (b) the government issues an amount of public debt. Interestingly, there also exists a couple child tax–health tax that can be used to find the second-best optimum optimorum. In addition, we show that results are robust to the inclusion of decisions regarding the child quantity–quality trade-off under the assumption of impure altruism. In particular, there exists a threshold value of the child tax below (resp. above) which child quality spending is unaffordable (resp. affordable) and different scenarios are in existence.     

Pay-as-you-go social security and endogenous fertility in a neoclassical growth model

This paper theoretically studies how unfunded pay-as-you-go social security affects economic growth, the fertility rate, and welfare in a neoclassical growth model. In addition, this paper considers a more general form of child-rearing cost, which is a mixture of time and money. The first observation is that whether the fertility rate increases or not by the expansion of the pay-as-you-go social security depends on (1) the size of the monetary child-rearing cost relative to the time spent on child-rearing and (2) the current fertility and interest rate in laissez faire. The second observation is that income per worker can increase by an expansion in pay-as-you-go social security when the output elasticity of capital is sufficiently small and the payroll tax rate is high. The last finding is that welfare can be improved even though capital is underaccumulated in an economy.     

Population growth and social security financing

By allowing the population growth to be flexible, this paper analyzes the effect of a tax reform that involves an introduction of consumption taxation for social security financing. It is found that population growth and labor supply play an important role in determining the effect of the tax reform. If population growth and labor supply are exogenous, then an introduction of a consumption tax for social security financing, with the payroll tax rate being endogenous, decreases the interest rate and increases capital accumulation. However, if population growth and labor supply are endogenous, then an introduction of a consumption tax for social security financing increases the interest rate and reduces capital accumulation. Received: 26 February 2001/Accepted: 26 August 2001     

Free education, fertility and human capital accumulation

This article analyzes the effect of free public education on fertility, private educational investments, and human capital accumulation at different stages of economic development. The model shows that, when fertility is endogenous, parental human capital levels are crucial for determining the effect of free education. At early stages of development when parental human capital is low, free access to basic education may provide the only chance to leave poverty. In contrast, at advanced stages of development when parental human capital is high, the availability of free education crowds out private educational investments, stimulates fertility, and may impede growth.     

生育率最优路径、劳动力供给转型与经济增长

通过内生化劳动力和人力资本,以Q-Q理论为基础,根据生育率在劳动力供给和人力资本积累中的联动关系以及劳动力供给转型规律,利用动态最优控制原理,解释了殖民解放以来发展中国家先上升后下降的人口再生产过程及经济效应。结果表明:生育率的最优路径呈倒U型;整个路径存在两个鞍点均衡,只有当人力资本积累跨越某个门槛值时,第一个鞍点均衡才能过渡到另一个鞍点均衡;均衡的产出水平与劳动力折旧率成正比,与人力资本折旧率成反比。     

Endogenous fertility,mortality and growth

Economic and demographic outcomes are determined jointly in a choice-theoretic model of fertility, mortality and capital accumulation. There is an endogenous population of reproductive agents who belong to dynastic families of overlapping generations connected through altruism. In addition to choosing savings and births, parents may reduce (infant) deaths by incurring expenditures on health-care which is also provided by the government. A generalised production technology accounts for long-run endogenous growth with short-run transitional dynamics. The analysis yields testable time series and cross-section implications which accord with the empirical evidence on the relationship between demography and development. Received: 22 April 1996 / Accepted: 2 April 1998     

The spillover effects of population aging, international capital flows, and welfare

This paper considers how a rise in old-age survival probability in a country with a higher old-age dependency ratio (the home country) influences the welfare of a country with a lower old-age dependency ratio (the foreign country). In a dynamically efficient steady-state equilibrium, we show that the old-age survival probability in the home country, when relatively low (high), has a positive (negative) effect on the welfare of the foreign country. We also show that the reform of a social security program in the home country may improve not only domestic welfare but also the welfare of the foreign country.     

The Optimal Trade-Off Between Quality and Quantity with Unknown Number of Survivors

In a model of endogenous fertility where individuals know the probability of child survival but not the final number of survivors, parents do not always formulate a precautionary demand for children. For some utility functions, parents have fewer children than what they would have in a situation in which the number of survivors is known earlier. The properties of the optimal economic policy depend on the degree to which the social welfare function takes ignorance into account. If social welfare is evaluated after parents know how many children survived, the parental response to uncertainty is socially inefficient. Individual decisions then should be corrected through tax or transfer on both births and education. This property helps determine the optimal public response to mortality crisis in the presence of educational externalities.     

Social security,social welfare and the aging population

This study examines the effects of pay-as-you-go social security programs in aging economies when the middle-aged both educate their dependent children and subsidize the retirement of the old. Using an overlapping generations framework in which agents are three-period lived but timing of death in the third period is uncertain, we analyze the effects of social security tax schemes, under various demographic assumptions, on capital accumulation, education expenditures, social welfare, and economic growth. We find that in many cases social security crowds out education, and reduces economic growth and social welfare. Received: 29 April 1998/Accepted: 3 March 1999     

Fertility, child care outside the home, and pay-as-you-go social security

We examine the long-run effects of the pay-as-you-go (PAYG) social security scheme on fertility and welfare of individuals in an overlapping generations model, assuming that child-care services are available in the market. We show that the impact of a tax increase on fertility depends on the relative magnitudes of the standard intergenerational redistribution effect through the social security system, the (implicit) subsidy effect through tax-exemption of child rearing at home, and the price effect through changes in the relative price of market child care, and that if parental child-rearing time is inelastic, a tax cut could bring about a Pareto-improving allocation.

The demographics of expropriation risk

It is often argued that capital should flow from aging industrialized economies to countries with fast-growing populations. However, institutional failures and the risk of expropriation substantially reduce developing economies’ attractiveness for foreign investors. We analyze the influence of a country’s demographic structure on international investment inflows, using a political economy model in which population growth potentially affects the risk of expropriation. We first explore how redistributive expropriation affects the welfare of different age groups and derive the government’s incentive to expropriate. We then analyze how the relative size of different generations influences the feasible volume of foreign investment.     

Personal income taxation under mobility, exogenous and endogenous welfare weights, and asymmetric information

This paper analyses how governments should tax labour income accruing to a group of highly skilled and geographically mobile individuals who divide their time or career between several jurisdictions. The analysis differs from previous models on migration and taxation by addressing optimal regulation when agents work for several principals. Optimal taxation is developed for social welfare functions with exogenous and endogenous welfare weights. Marginal income taxes are applied for screening purposes, and the rates are lower with endogenous than with exogenous welfare weights. Received: 22 January 1998/Accepted: 3 July 1999)     

Education and income inequality: The role of a social protection system

In this paper we aim to understand the role a welfare state can play in stimulating risky but profitable activities like investment in education, and in reducing income inequality. We analyze how unemployment benefits may affect investment in education when the latter is characterized by uncertain returns. This is done in an overlapping generations model in which endogenous growth is introduced through human capital accumulation. We develop a numerical example of the model in order to reproduce some key differences between the European versus the North American economy; differences that, according to this model, result from the different degree of social protection characterizing both economies. Received: 02 June 1999/Accepted: 22 February 2000     

Some macroeconomic aspects of global population aging

Across the demographic transition, declining mortality followed by declining fertility produces decades of rising support ratios as child dependency falls. These improving support ratios raise per capita consumption, other things equal, but eventually deteriorate as the population ages. Population aging and the forces leading to it can produce not only frightening declines in support ratios but also very substantial increases in productivity and per capita income by raising investment in physical and human capital. Longer life, lower fertility, and population aging all raise the demand for wealth needed to provide for old-age consumption. This leads to increased capital per worker even as aggregate saving rates fall. However, capital per worker may not rise if the increased demand for wealth is satisfied by increased familial or public pension transfers to the elderly. Thus, institutions and policies matter for the consequences of population aging. The accumulation of human capital also varies across the transition. Lower fertility and mortality are associated with higher human capital investment per child, also raising labor productivity. Together, the positive changes due to human and physical capital accumulation will likely outweigh the problems of declining support ratios. We draw on estimates and analyses from the National Transfer Accounts project to illustrate and quantify these points.     

Population policy in Western Europe

Abstract Policies concerning procreation and fertility are considered first. In Western Europe there are countries which fully recognize and implement the personal rights of the individual to plan and space the number of children, as well as others denying these rights. The nature and implications of laws and policies concerning contraception, abortion and family planning in general are briefly described and their effects discussed. The second topic considered the welfare and the economy of the family. The incidence of family allowance schemes, taxation systems, protection of working mothers, educational facilities (especially for children of pre-school age), and publicly financed housing is reviewed in an effort to understand whether the various social and legislative systems favour procreation and the raising of the children. The situation is contradictory: very mild pro-natalist effects of family allowances are partly offset by a taxation system that im unfavourable to the family, since husbands' and wives' incomes are in many instances assessed jointly. Increasing protection of working women may reconcile economic activity with childbearing, but serious shortage of institutions to care for very young children makes employment of mothers difficult. The third topic is mobility, internal and international. Possibly the most serious demographic problems of Western Europe are the strong internal streams of migrants, congestion of cities and depopulation of rural areas. Measures for coping with these problems are generally in adequate. At the same time, international migration in very strong with many millions of foreign workers in various countries. The countries of immigration, although themselves tending towards almost stationary populations, seem not to accept the implications of this fact - particularly the cessation of growth of the domestic labour force. Temporary import of manpower through temporary immigration is a short-term solution which cannot be sustained indefinitely. The paper concludes with a final consideration. Western European countries could probably lower their levels of fertility rather easily by giving more support to family planning programmes, liberalizing abortion, etc. But should fertility consistently and for a long time fall below replacement, where are the measures for stimulating recovery? Address delivered before the Population Association of America, New Orleans, 26 April 1973.     

Explanations of the fertility crisis in modern societies: A search for commonalities

Near‐global fertility decline began in the 1960s, and from the 1980s an increasing number of European countries and some Asian ones achieved very low fertility (total fertility below 1.5) with little likelihood of completed cohort fertility reaching replacement level. Earlier theory aiming at explaining this phenomenon stressed the incompatibility between post‐industrial society and behaviour necessary for population replacement. Recent theory has been more specific, often concentrating on the current Italian or Spanish situations or on the contrast between them and the situation in either Scandinavia or the English‐speaking countries, or both. Such an approach ignores important evidence, especially that from German‐speaking populations. The models available concentrate on welfare systems and family expenses, omitting circumstances that may be unique to individual countries or longer‐term factors that may be common to all.