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Journal of Population Economics

, Volume 10, Issue 3, pp 335–356 | Cite as

Intergenerational redistribution in a small open economy with endogenous fertility

  • Martin Kolmar
Original

Abstract.

For pay-as-you-go financed pension systems, claims may be calculated according to individual contributions (income) or the number of children of a family. We analyse the optimal structure of these parameters in a model with endogenous fertility. It is shown that for both structural determinants there exists no interior solution of the problem of intragenerational utility maximisation. Thus, pure systems are always welfare maximizing. Furthermore, children-related pension claims induce a fiscal externality that tends to be positive. The determination of the optimal contribution rate shows that the widely accepted Aaron-condition is in general a misleading indicator for the comparison of fully funded and pay-as-you-go financed pension systems.

JEL classification: J13 H23 H55 
Key words: Endogenous fertility pay-as-you-go financed pension systems 

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Copyright information

© Springer-Verlag Berlin Heidelberg 1997

Authors and Affiliations

  • Martin Kolmar
    • 1
  1. 1.Faculty of Economics and Statistics and SFB 178, University of Konstanz, P.O. Box 5560-136, D-78434 Konstanz, Germany (Fax: D-7531-88-4135, e-mail: martin.kolmar@uni-konstanz.de)DE

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