Fertility-related pensions and cyclical instability

In this paper, we study a general equilibrium model with overlapping generations, endogenous fertility and public pensions. By assuming Cobb–Douglas technology and logarithmic preferences, we show that the introduction of a fertility-related component in the pay-as-you-go pension scheme may destabilise the long-term equilibrium and cause endogenous fluctuations when individuals have static expectations. The possibility of cyclical instability increases (resp. reduces) when both the subjective discount factor and relative weight of individual fertility in pay-as-you-go pensions (resp. the parents’ taste for children) increase(s). Interestingly, when public pensions are contingent on the individual number of children, the financing of small-sized benefits may cause the occurrence of a flip bifurcation, two-period cycles and cycles of a higher order. In addition, we show through numerical simulations that these results hold in a more general setting with a constant inter-temporal elasticity of substitution utility function and a constant elasticity of substitution production function. Our findings identify a possible novel factor responsible for persistent deterministic fluctuations in a context of overlapping generations, while also representing a policy warning regarding the destabilising effects of fertility-related pension reforms, which are currently high in both the theoretical debate and the political agendas of several developed countries.     

Pensions with heterogenous individuals and endogenous fertility

We study the design of pension schemes when fertility is endogenous and parents differ in ability to raise children. Pay-as-you-go schemes require, under perfect information, a marginal subsidy on fertility to correct for the externality they create, equal pensions, and contributions that increase or decrease with the number of children. Under asymmetric information, incentive-related distortions supplement the Pigouvian subsidy. These require an additional subsidy or an offsetting tax depending on whether the redistribution is towards people with more or with less children. In the former case, pensions are decreasing in the number of children; otherwise, they are increasing.     

Are the Real Time Costs of Children Equally Shared by Mothers and Fathers?

This article attempts to estimate the time cost of children in France for couples who do not forgo any income, on the basis of the INSEE 1998–1999 time use survey. Having a child involves an increase in domestic work and/or the dedication of occupational income to pay for childcare. The reduction in “time for oneself”—leisure and personal care, i.e. 24 h less working hours paid or unpaid—is modelled for a dual-earner couple in full-time employment who do not use childcare services to increase his/her leisure time. Taking a couple in full-time employment avoids income endogeneity bias, since income is reduced by career interruption and part-time employment. These estimates account for this selection by full-time paid work. The article shows that time cost is roughly 1 h 30 min a day for a child aged 3–14, and is 4 h a day for each younger child. As this cost rises, the more fathers sacrifice some of their free time. The father and mother of two young children with a childminder thus each have only 11 hours of free time (including sleep) per day. The time cost of a large family (3 children) is equivalent to a full-time job on the labour market. In France, work-life balance policies and family pension entitlements only cover a small part of this cost.     

独生子女规模估算及其对政府奖励性支出的影响——以苏州市为例

本文将抽样调查资料与人口普查资料相结合,利用多种统计方法、多方案推算苏州市独生子女存量规模以及未来各年数量,并据此测算了未来各年政府可能的配套奖励性支出。研究结果表明：独生子女大规模进入婚育年龄将势必引起政策生育率的上升,未来各年政府用于独生子女家庭及其父母养老等计划生育政策奖励性支出将逐年增加．财政负担日益加重。建议政府对计划生育配套奖励政策适时进行调整,由现行的提供物质奖励向提供优质服务和社会保障转变。     

Private versus public old-age security

We directly compare two institutions, a family compact—a parent makes a transfer to her parent in anticipation of a possible future gift from her children—with a pay-as-you-go, public pension system, in a life cycle model with endogenous fertility wherein children are valued both as consumption and investment goods. Absent intragenerational heterogeneity, we show that a benevolent government has no welfare justification for introducing public pensions alongside thriving family compacts since the former is associated with inefficiently low fertility. This result hinges critically on a fiscal externality—the inability of middle age agents to internalize the impact of their fertility decisions on old-age transfers under a public pension system. With homogeneous agents, a strong-enough negative aggregate shock to middle-age incomes destroys all family compacts, and in such a setting, an optimal public pension system cannot enter. This suggests the raison d’être for social security must lie outside of its function as a pension system—specifically its redistributive function which emerges with heterogeneous agents. In a simple modification of our benchmark model—one that allows for idiosyncratic frictions to compact formation such as differences in infertility/mating status—a welfare-enhancing role for a public pension system emerges; such systems may flourish even when family compacts cannot.     

Social security reform and the support for public education

Old age pensions and public education account for a large share of public budgets. We link both programs through a tax-transfer system that is also sensitive to labor market distortions. We analyze the impact that alternative pension reforms have, through the political process, on publicly financed education. We explain how changes in the pension system design affect the link between the two programs and also labor market incentives. These effects, if they exist, act in opposite directions. Overall, we find that most proposals that entail a partial privatization of pensions reduce the willingness of the society to fund public education.     

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。     

Pay-as-you-go financed public pensions in a model of endogenous growth and fertility

Employing an overlapping generations endogenous growth model in which parents derive utility from having children and, additionally, expect children to support them in old age, this paper explores the interrelation between growth, fertility, and the size of pay-as-you-go financed public pensions. It is shown that small sized public pensions stimulate per capita income growth, but further increases in public pensions eventually reduce it. Fertility, on the other hand, falls by an increase in public pensions if they are either small or large. Medium sized public pensions, however, may stimulate fertility. Received: 9 September 1997 / Accepted: 10 April 1998     

Growing old and staying young: population policy in an ageing closed economy

This paper analyses the relation between public pensions, fertility and child care in a closed-economy overlapping generations model with endogenous fertility. It is shown that raising a child involves two social externalities and that it is optimal to introduce child allowances if the government redistributes income from the young to the old. The optimal child allowance rises when longevity increases. If the costs of raising children depend positively on the wage, a third externality arises and the returns to savings should be taxed.

Another Child? Fertility Ideals,Resources and Opportunities

Low fertility in most developed countries has prompted policy concern in relation to labour market supply, pensions, and expenditure on health and welfare services as well as policy debate about both the cost of children and the opportunity costs of parenthood. The extent to which family policy interventions can be effective in slowing or reversing fertility decline is much debated. This paper, based on a fertility module of the Scottish Social Attitudes Survey 2005, examines the current fertility, and ideal and expected fertility of a nationally representative sample of 455 parents of reproductive age and focuses on whether they plan to have another child. It compares the characteristics of those who intend to have another child with those who do not, and how parents with one child differ from those with more children. It addresses three questions about family size: (1) fertility ideals, (2) resources and the economic implications of childbearing, and (3) opportunities for childbearing and the effects of a late start on fertility expectations. It concludes that, despite a sustained period of low fertility in Scotland, childbearing ideals are robust and explanations of low fertility must derive from difficulties in realising those ideals. Difficulties in realising fertility aspirations are associated less with resources than with opportunities for childbearing, especially the timing of first birth. Those who delay their first birth are less likely to realise their ideal family size, and their lower fertility is associated with the opportunity costs of childbearing in terms of foregone qualifications, careers and earnings.     

The effects of child-related benefits and pensions on fertility by birth order: A test on Hungarian data

Using aggregate time-series data from post-war Hungary, we investigated the effect of child-related benefits and pensions on overall fertility and fertility by birth order. The results indicate moderate effects that are robust across a wide range of specifications. According to our estimates, a 1-per-cent increase in child-related benefits would increase total fertility by 0.2 per cent, while the same increase in pensions would decrease fertility by 0.2 per cent. The magnitude of both effects increases by birth order; this is more robust for child-related benefits.     

To have or not to have? Australian women’s childbearing desires,expectations and outcomes

Australia’s low fertility rate is commonly attributed to deliberate decisions by women to avoid having children. Existing theoretical explanations of fertility decision-making mostly view childbearing as a rational, voluntary process and focus on the ‘costs’ to women of having children. Although this may help explain why women do not have children, it contributes very little to understanding why women do have children. This study describes childbearing desires, expectations and outcomes in a population-based sample of 569 30–34-years-old Australian women recruited from the Australian Electoral Roll in 2005. Most women surveyed wanted to have children, and their childbearing outcomes were associated with biological, psychological and social factors including the lack of a partner and adverse health conditions. The factors and their relative importance varied by parity. Most women had fewer children than they desired, and many would have children, or more children, if their circumstances were different. These data challenge prevailing assumptions about women’s childbearing behaviour that women are able to choose when and if they have a child. Based on the findings, a conceptual framework of childbearing behaviour is proposed which builds on existing theoretical explanations to explain why women do and do not have children, differences by parity, and the role of circumstances in women’s childbearing behaviour. The findings and conceptual framework have implications for public policies, and indicate that multiple approaches are required which are sensitive to and address the barriers women face in family formation.     

Pension reform and labor market incentives

This paper investigates how parametric reform in a pay-as-you-go pension system with a tax–benefit link affects retirement and work incentives of prime-age workers. We find that postponed retirement tends to harm incentives of prime-age workers in the presence of a tax–benefit link, thereby creating a policy trade-off in stimulating aggregate labor supply. We show how several popular reform scenarios are geared either towards young or old workers or, indeed, both groups under appropriate conditions. We characterize the excess burden of pension insurance and show how it depends on the supply elasticities of both decision margins and the effective tax rates.     

Divorced Fathers’ Proximity and Children’s Long-Run Outcomes: Evidence From Norwegian Registry Data

This study examines the link between divorced nonresident fathers’ proximity and children’s long-run outcomes, using high-quality data from Norwegian population registers. We follow (from birth to young adulthood) each of 15,992 children born into married households in Norway in the years 1975–1979 whose parents divorced during his or her childhood. We observe the proximity of the child to his or her father in each year following the divorce and link proximity to educational and economic outcomes for the child in young adulthood, controlling for a wide range of observable characteristics of the parents and the child. Our results show that closer proximity to the father following a divorce has, on average, a modest negative association with offspring’s outcomes in young adulthood. The negative associations are stronger among children of highly educated fathers. Complementary Norwegian survey data show that highly educated fathers report more post-divorce conflict with their ex-wives as well as more contact with their children (measured in terms of the number of nights that the child spends at the father’s house). Consequently, the father’s relocation to a more distant location following the divorce may shelter the child from disruptions in the structure of the child’s life as they split time between households and/or from post-divorce interparental conflict.     

How parenthood experiences influence desire for more children in Australia: A qualitative study

The low-fertility debate in developed countries has focused on the limits to family size posed by the financial costs of raising children, and difficulties combining work and family. Little attention has been given to the physical and socio-psychological experiences of conception, pregnancy, birth and early parenthood, and their potential effect on parity progression. Womens rising education and workforce participation rates are often seen as key factors in fertility decline, offering attractive alternatives to motherhood, but research suggests that they also undermine levels of knowledge, confidence and interest in motherhood. Demographers have made almost no link between people having fewer children than they might otherwise have had and their previous childbearing and childrearing experiences. Interviews conducted in South Australia in 2003–04 with parents of both small and large families show that fertility and family size are influenced both negatively and positively by experiences of having had children. The paper argues that if low fertility rates are to be stabilized or raised in developed countries, then researchers and policymakers must consider the physical and socio-psychological costs of having children for parents, and provide support mechanisms so that experiences of parenthood contribute as little as possible to fertility gaps and delayed fertility.     

Population aging and PAYG pensions in the OLG model

This paper shows the effects on a pay-as-you-go pension system of the demographic change in the standard overlapping generations model. Firstly, we consider a setting with exogenous fertility and then a model with endogenous fertility. In both cases, population aging due to increased longevity implies a reduction in pensions payouts.     

The Impact of Fathers’ Work and Family Conflicts on Children’s Self-Esteem: The Hong Kong Case

Work and family conflicts are always viewed as issues of human resource management or occupational health. Insufficient attention has been focused on the impact on child development and quality of parenting, especially regarding the impact of a father’s work. To examine the impact of work and family conflicts on the quality of father–child interactions in Hong Kong, a cross-sectional survey was conducted. In total, 556 pairs of working fathers and their school-aged children participated in the survey. The findings of the survey indicated that fathers’ work-to-family conflicts negatively affected the quality of father–child interactions, which in turn caused harm to children’s self-esteem. In addition to work-family conflicts, a low income level of the fathers, a larger number of children in the family, and the presence in the family of children approaching adolescence were significant risk factors to the quality of father–child interactions. The mothers’ active parental involvement and the complexity of the fathers’ occupation were significant protective factors of the quality of father–child interactions. To facilitate strong family bonding and good quality parenting, possible measures to ensure a healthy work-family balance among working fathers are discussed.     

Contraception,attitude-practice,and fertility differentials among US Hispanic,African–American and white women

Hispanic fertility (primarily among nationals from Mexico, Central and South America in the US) is higher today than it is in Mexico and the other nations of origin (Frank and Heuveline 2005). It persists into the second and third generations, with only moderate signs of declining to replacement. Meanwhile, the fertility rates of African–Americans, American Indians Cubans, and Puerto Ricans have all declined to replacement, only slightly above the non-Hispanic white population. This study attempts to clarify the question why African–American fertility has declined to replacement, but Hispanic fertility has not. The data used are from Cycle 6 of the National Survey of Family Growth (NSFG) of 2002. Differences in physiological or marital-status factors are found not to explain these fertility differences; however, there are significant differences in the practice of contraception during early childbearing years. Slightly less effective methods if contraception is used, and less recourse to abortion if a pregnancy is undesired, all imply higher fertility for Hispanic women. Underlying contraceptive behaviour are sets of attitudes and motives that favour, permit, or seek childbearing. A much higher percentage of Hispanic than African–American women report that they wanted their last birth and intend to have another in the future. Hispanic women of all socio-economic statuses are considerably more pronatal in their attitudes, particularly with respect to the births of first and second children.     

The Evolution of Family Complexity from the Perspective of Nonmarital Children

We document the incidence and evolution of family complexity from the perspective of children. Following a cohort of firstborn children whose mothers were not married at the time of their birth, we consider family structure changes over the first 10 years of the child’s life—considering both full and half-siblings who are coresidential or who live in another household. We rely on detailed longitudinal administrative data from Wisconsin that include information on the timing of subsequent births to the mother and father, and detailed information on earnings, child support, and welfare. We find that 60% of firstborn children of unmarried mothers have at least one half-sibling by age 10. Our results highlight the importance of having fertility information for both fathers and mothers: estimates of the proportion of children with half-siblings would be qualitatively lower if we had fertility information on only one parent. Complex family structures are more likely for children of parents who are younger or who have low earnings and for those in larger urban areas. Children who have half-siblings on their mother’s side are also more likely to have half-siblings on their father’s side, and vice versa, contributing to very complex family structures—and potential child support arrangements—for some children.     

Does family policy affect fertility?

From the mid-1960s to around 1980, Sweden extended its family policies that provide financial and in-kind support to families with children very quickly. The benefits were closely tied to previous work experience. Thus, women born in the 1950s faced markedly different incentives when making fertility choices compared to women born only 15–20 years earlier. This paper examines the evolution of completed fertility patterns for Swedish women born in 1925–1958 and makes comparisons to women in neighbouring countries where the policies were not extended as much as in Sweden. The results suggest that the extension of the policy raised the level of fertility, shortened the spacing of births, and induced fluctuations in the period fertility rates, but it did not change the negative relationship between women’s educational level and completed fertility.