Optimal social security in a dynastic model with investment externalities and endogenous fertility

Zhang, Jie and Zhang, Junsen (2007) Optimal social security in a dynastic model with investment externalities and endogenous fertility. Journal of Economic Dynamics and Control, 31 11: 3545-3567. doi:10.1016/j.jedc.2006.12.005

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Author Zhang, Jie
Zhang, Junsen
Title Optimal social security in a dynastic model with investment externalities and endogenous fertility
Journal name Journal of Economic Dynamics and Control   Check publisher's open access policy
ISSN 0165-1889
Publication date 2007
Sub-type Article (original research)
DOI 10.1016/j.jedc.2006.12.005
Volume 31
Issue 11
Start page 3545
End page 3567
Total pages 23
Editor C. Chiarella
C. H. Hommes
W.J. den Haan
Place of publication Amsterdam, Netherlands
Publisher Elsevier Science
Collection year 2008
Language eng
Subject C1
Abstract This paper studies optimal pay-as-you-go social security with investment externalities, positive bequests and endogenous fertility. With an investment externality, a competitive solution without social security suffers from under-investment in capital and over-reproduction of population. We show the existence of time-consistent optimal social security that improves welfare by reducing fertility and increasing capital intensity. We also illustrate numerically that a small degree of this externality can justify the observed high ratios of social security spending to GDP.
Keyword Economics
Social security
Welfare
Fertility
Bequests
Externality
Economic-growth
Transfers
Altruism
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

 
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Citation counts: TR Web of Science Citation Count  Cited 8 times in Thomson Reuters Web of Science Article | Citations
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Created: Mon, 18 Feb 2008, 15:23:15 EST