Advertisement

Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Europe’s Demographic Deficit A Plea For A Child Pension System

  • 250 Accesses

  • 13 Citations

Summary

This paper considers the economic implications of the stalling birth rates and demographic development in Europe. To remedy for this it proposes a child pension system. This system allows additional pension facilities depending on the number of children raised. It should be a PAYG pension financed with an income tax. The main motivation for this is that parents have invested resources which also benefit society.

This is a preview of subscription content, log in to check access.

References

  1. Bovenberg, L. (2004), ‘Balancing Work and Family/Private Life: Life-course Arrangements’, mimeo, Tilburg University.

  2. F. Breyer (1989) ArticleTitleOn the Intergenerational Pareto Efficiency of Pay-as-You-Go financed Pension Schemes Journal of Institutional and Theoretical Economics 145 643–658

  3. J.K. Brunner (1996) ArticleTitleTransition from a Pay-as-you-go to a Fully Funded Pension System: The Case of Differing Individuals and Intragenerational Fairness Journal of Public Economics 60 131–146 Occurrence Handle10.1016/0047-2727(95)01517-5

  4. D. Card (1999) ‘The Causal Effect of Education on Earnings’ O Ashenfelter D Card (Eds) Handbook of Labor Economics Elsevier Amsterdam

  5. Cigno, A., L. Casolaro and F.C. Rosati (2000), ‘The Role of Social Security in Household Decisions: VAR Estimates of Saving and Fertility Behaviour in Germany’, CESifo Working Paper No. 394, Munich.

  6. A. Cigno F.C. Rosati (1996) ArticleTitleJointly Determined Saving and Fertility Behaviour: Theory, and Estimates for Germany, Italy, UK and USA European Economic Review 40 1561–1589 Occurrence Handle10.1016/0014-2921(95)00046-1

  7. A. Cigno F.C. Rosati (1997) ArticleTitleRise and Fall of the Japanese Saving Rate: The Role of Social Security and Intra-family Transfers Japan and the World Economy 9 81–92 Occurrence Handle10.1016/S0922-1425(96)00238-1

  8. A Cigno M Werding (2004) Children and Pensions, unpublished manuscript Ifo Institute for Economic Research Munich

  9. I. Ehrlich J.-G. Chong (1998) ArticleTitleSocial Security and the Real Economy: An Inquiry into Some Neglected Issues American Economic Review 88 151–157

  10. Ehrlich, I. and J. Kim (2001), ‘Social Security, Demographic Trends, and Economic Growth: Theory and Evidence from the International Experience,’ SUNY Working Paper, Buffalo, mimeo.

  11. European Commission, Enterprise DG: Business Demography in Europe, Observatory of European SMEs 2002, No. 5. http://europa.eu.int/comm/enterprise/enterprise\_policy/analysis/observatory.htm.

  12. Feldstein, M. (1995), ‘Would Privatizing Social Security Raise Economic Welfare?’, NBER Working Paper No. 5281, Washington, D.C.

  13. R. Fenge (1995) ArticleTitlePareto Efficiency of the Pay-as-You-Go Pension System with Intergenerational Fairness Finanzarchiv 52 357–363

  14. Fenge, R. and M. Werding (2004), ‘Ageing and the Tax Implied in Public Pension Schemes: Simulation for Selected OECD Countries’, Fiscal Studies, 25, pp. 159–200. CESifo Working Paper No. 841, Munich.

  15. Geanakopolos, J., O.S. Mitchell, and S.P. Zeldes (1998), ‘Would a Privatized Social Security System Really Pay a Higher Rate of Return?’ NBER Working Paper No. 6713, Washington D.C.

  16. JP Guilford (1967) The Nature of Human Intelligence Mc Graw-Hill New York

  17. S. Homburg (1990) ArticleTitleThe Efficiency of Unfunded Pension Schemes Journal of Institutional and Theoretical Economics 146 640–647

  18. Homburg, S. (1997), ‘Old Age Pension Systems: A Theoretical Evaluation,’ in: H. Giersch (ed.), Reforming the Welfare State, Berlin, Heidelberg and New York, Springer, pp. 233--246.

  19. C Harmon I Walker N Westergaard-Nielsen (Eds) (2001) Education and Publishing Cheltenham Northampton, MA

  20. H Lampert (1976) Priorität für die Familie. Plädoyer für eine nationale Familienpolitik Duncker & Humblot Berlin

  21. H.C. Lehmann (1953) Age and Achievement Princeton University Press Princeton

  22. A. Lindbeck M. Persson (2003) ArticleTitleThe Gains from Pension Reform Journal of Economic Literature 41 74–112 Occurrence Handle10.1257/.41.1.74

  23. Lüdeke, R. (1988), ‘Staatsverschuldung, intergenerative Redistribution und umlagefinanzierte gesetzliche Rentenversicherung: Eine andere Sicht der Lasten durch ein negatives Bevölkerungswachstum,’ in: J. Klaus and P. Klemmer (eds.), Wirtschaftliche Strukturprobleme und soziale Fragen, Berlin, Duncker Humblot.

  24. W. Meister W. Ochel (2003) ArticleTitle‘Steuerliche Förderung von Familien im internationalen Vergleich’ ifo Schnelldienst 56 IssueID5 65–67

  25. Oksanen, H. (2001), ‘A Case for Partial Funding of Pensions with an Application to the EU Candidate Countries’, CESifo Working Paper No. 466, Munich.

  26. Oksanen, H. (2002), ‘Pension Reforms: Key Issues Illustrated with an Atuarial Model’, European Commission Directorate-General for Economic and Financial Affairs, Economic Papers 174, Brussels. Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung (2003), Staatsfinanzen konsolidieren–Steuersystem reformieren, Jahresgutachten 2003/04, Wiesbaden.

  27. Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung (2003), Staatsfinanzen konsolidieren -- Steuersystem reformieren, Jahresgutachten 2003/04, Wiesbaden.

  28. Sinn, H.-W. (1990), ‘Allokations- und Distributionseffekte schrumpfender Bevölkerungen bei alternativen Alterssicherungssystemen in Modellen überlappender Generationen, Comment on K. Jäger,’ in B. Gahlen, H. Hesse, H.J. Ramser and G. Bombach (eds.), Theorie und Politik der Sozialversicherung, Wirtschaftswissenschaftliches Seminar Ottobeuren, Vol. 19, Tübingen, J.C.B. Mohr (Paul Siebeck), pp. 99--101.

  29. Sinn, H.-W. (1997), ‘The Value of Children and Immigrants in a Pay-as-you-go Pension System: A Proposal for a Transition to a Funded System,’ NBER Working Paper No. 6229, \hbox{Washington} D.C. also: {\it ifo Studien}, 47, (2001), pp. 77--94.

  30. Sinn, H.-W. (1998), ‘A General Comment on the Old Age Pension Problem: A Funded System for those who Caused the Crisis,’ Comments on A. Börsch-Supan, E. Gramlich and M. Persson, in: H. Siebert, (ed.), Redesigning Social Security, Tübingen, J.C.B. Mohr (Paul Siebeck), pp. 197--203.

  31. Sinn, H.-W. (1999), ‘Die Krise der Gesetzlichen Rentenversicherung und Wege zu ihrer Lösung,’ Yearbook of the Bavarian Academy of Sciences, Plenary lecture 1998, Munich, C.H. Beck.

  32. Sinn, H.-W. (2000), ‘Pension Reform and Demographic Crisis. Why a Funded System is Needed and Why It is Not Needed,’ Plenary lecture, IIPF World Congress, Moscow, August 1999, International Tax and Public Finance, 7, pp. 389--410.

  33. H.-W. Sinn (2004a) ArticleTitleEU Enlargement, Migration and the New Constitution forthcoming in CESifo Economic Studies 50 685–707 Occurrence Handle10.1093/cesifo/50.4.685

  34. HW Sinn (2004b) Ist Deutschland noch zu retten? EditionNumber8 Econ Berlin

  35. H.-W. Sinn (2004c) ArticleTitleThe Pay-as-you-go Pension System as a Fertility Insurance and Enforcement Device Journal of Public Economics 88 1335–1357 Occurrence Handle10.1016/S0047-2727(03)00015-X

  36. Sinn, H.-W., G. Flaig, M. Werding, S. Munz, N. Düll and H. Hofmann (in co-operation with the Max-Planck-Institut for Foreign and International Social Law) (2001), EU Expansion and Labour Emigration: Ways to a Gradual Convergence of the Labour Market, Study commissioned by the Federal Ministry for Labour and Social Affairs, Ifo Institute for Economic Research, Munich.

  37. H.-W. Sinn S Uebelmesser (2002) ArticleTitlePensions and the Path to Gerontocracy in Germany European Journal of Political Economy 19 153–158 Occurrence Handle10.1016/S0176-2680(02)00134-9

  38. H.-W. Sinn M Werding (2000) ArticleTitle‘Rentenniveausenkung und Teilkapitaldeckung: Ifo-Empfehlungen zur Konsolidierung des Umlageverfahrens’ ifo Schnelldienst 53 IssueID18 12–25

  39. Sinn, H.-W. and M. Werding (2001), ‘Zuwanderung nach der EU-Osterweiterung: Wo liegen die Probleme?,’ ifo Schnelldienst, 54 (8), pp. 18--27; English version: ‘Immigration Following EU Eastern Enlargement,’ CESifo Forum, 2 (2), pp. 40--47.

  40. Uebelmesser, S. (2004a), ‘Political Feasibility of Pension Reforms’, Topics in Economic Analysis & Policy, 4, Article 20.

  41. S Uebelmesser (2004b) Unfunded Pension Systems: Ageing and Migration Elsevier Amsterdam, Boston, Heidelberg Occurrence Handle10.1108/S0573-8555(2004)264

  42. Weinert, F.E. (1997), Wissen und Denken–Über die unterschätzte Bedeutung des Gedächtnisses für das menschliche Denken, 1996 Yearbook of the Bavarian Academy of Sciences, Munich.

  43. Werding, M. (1998), Zur Rekonstruktion des Generationenvertrages, Tübingen, J.C.B. Mohr (Paul Siebeck).

  44. Werding, M. (2003), ‘Child Expenditure and Public Pensions,’ in: J. Gradshaw (ed.), Children and Social Security, Ashgate, Aldershot, pp. 141--165.

  45. Wissenschaftlicher Beirat beim Bundesministerium für Wirtschaft (1998), Grundlegende Reform der gesetzlichen Rentenversicherung, Bundesministerium f\”ur Wirtschaft, Bonn.

Download references

Author information

Correspondence to Hans-Werner Sinn.

Additional information

18th Tinbergen Lecture, Amsterdam, October 22, 2004

Ifo Institute for Economic Research at the University of Munich.

I am grateful to Lans Bovenberg and Peter Cornelisse for useful conversations about the Dutch pension system and Tinbergen’s views on children and pensions. I thank Robert Koll, Regina von Hehl and Elsita Walter for careful research assistance, and Tobias Seidel, Michael Stimmelmayr, Martin Werding and Markus Zimmer for useful comments.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Sinn, H. Europe’s Demographic Deficit A Plea For A Child Pension System. De Economist 153, 1–45 (2005). https://doi.org/10.1007/s10645-004-8084-1

Download citation

Keywords

  • pension system
  • birth rate
  • human capital
  • demography