Fertility, child care outside the home, and pay-as-you-go social security |
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Authors: | Makoto Hirazawa Akira Yakita |
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Affiliation: | (1) Graduate School of Economics, Chukyo University, 101-2 Yagoto-honmachi, Showa-ku, Nagoya 466-8666, Japan;(2) Graduate School of Systems and Information Engineering, University of Tsukuba, 1-1-1 Tennodai, Tsukuba 305-8573, Japan |
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Abstract: | 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. |
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Keywords: | Fertility Child care outside the home Pay-as-you-go social security |
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