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Public Pensions, Family Allowances and Endogenous Demographic Change

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  • Peters, Wolfgang
Abstract
In addition to an old-age insurance system which redistributes income from the young to the old, family allowances build a further redistributive system which typically favors younger and burdens older generations. Family allowances have tow main tasks: first, child allowances offer an incentive for child-bearing which influences fertility in an economy. Second, subsidies which ease the financial burden of a child's education guarantee a higher average level of productive skills and therefore enhance net domestic product. If individual demand for having and educating children leads to an impact on the economic system as a whole, we have external effects. In such a case, corrective taxation (Pigouvian tax) should be considered.

Suggested Citation

  • Peters, Wolfgang, 1995. "Public Pensions, Family Allowances and Endogenous Demographic Change," Journal of Population Economics, Springer;European Society for Population Economics, vol. 8(2), pages 161-183, May.
    • Handle: RePEc:spr:jopoec:v:8:y:1995:i:2:p:161-83
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