The Transition to Market Economies in an Endogenous Growth Model with Altruistic Agents

This paper considers an endogenous transition from a self-sufficient traditional economy to a market economy and its consequences on fertility and growth. The transition can occur if private intergenerational transfers are unable to secure old-age consumption as adequately as savings on capital markets; otherwise individuals stay in the traditional economy unless the mass-production technology in the market economy is sufficiently more advanced than individually accessible technologies. Markets emerge only if per capita output exceeds a certain level given a fixed cost of forming markets. The transition reduces fertility and promotes growth under plausible restrictions.
JEL Classification : E 20; J 13; O 10     

Social Security and Growth in an Altruistic Economy

This paper studies the macroeconomic impact of private and public intergenerational transfers in the presence of endogenous growth. It focuses on two-sided altruism implying that individuals have both a motive to make gifts to their parents and a motive to leave bequests to their children. The growth effects of social security depend on whether children are making gifts to their parents or parents are leaving bequests to their children. Which of the transfers is operative, in turn, depends on the size of social security benefits. Social security is legislated endogenously. The introduction of a social security program which definitely reduces per capita income growth and harms future generations is contemplated by altruistic individuals even if non-altruistic individuals disapprove it.     

Effect of social security on fertility and savings: an overlapping generations model

Old-age pension schemes do not exist in most developing countries, so adults bear children as security investments for the future. This phenomenon leads to unduly high rates of population growth. It has been hypothesized that introducing social security programs in such countries would increase savings rates and reduce the number of children born over the long term. The author studies the general equilibrium effects of some social security programs on rates of population growth and capital accumulation within an overlapping generations framework with endogenous fertility and savings. Specifically, Raul's overlapping generations growth model is extended to study the general equilibrium effects of payroll-tax-financed and child-tax-financed social security programs. It is shown that if the rate of intergenerational income transfers from young to old or child care cost is low, competitive equilibrium leads toward overpopulation and capital accumulation in a modified Pareto optimal sense; a social security program in such a case is therefore Pareto improving. A fully-funded system is not neutral when financed by child taxes. Finally, it is also shown that unlike in the case of exogenous fertility where competitive equilibrium attains steady state only asymptotically, fertility, when endogenous, may attain a unique globally steady state in finite time.     

Intergenerational transfers and demographic transition

This paper presents an analysis of demographic transition based on the endogenous evolution of intergenerational transfers along an economy's endogenous path of development. Two-period-lived agents belonging to overlapping generations choose optimally their desired levels of consumption and fertility, together with their desired sizes of transfers to both parents and children. Parents are more efficient than children in producing output, but some parental time must be devoted to child-rearing. At low levels of development, fertility is high and the flow of net intergenerational transfers is from the young to the old. At high levels of development, fertility is low and the flow of net transfers is from the old to the young. These results accord strongly with empirical observations and the analysis may be seen as formalising, for the first time, a long-standing and well-respected hypothesis in the demographic transition literature.     

Growth and Convergence in a Two-Region Model of Unified Germany

The paper sets up a two-region endogenous growth model to discuss growth and regional convergence of unified Germany. It emphasizes the role of private and public capital accumulation during the developing process. The theoretical part derives fiscal policy rules which establish convergence of regional output per capita and convergence of regional human wealth. To assess the speed of convergence the model is calibrated with German data. Given a fiscal policy rule that is consistent with the data on government spending in East and West Germany after unification the model suggests that East Germany will reach 80 per cent of West Germany's income per capita between 20 and 30 years after unification and that actual transfers are approximately sufficient to equalize regional human wealth. The results are compared with an extension of the model that includes wage-setting behaviour and unemployment in the eastern region.     

私人代际转移动机研究*——基于CHARLS的实证分析

经济学家对代际的物质和时间转移的兴趣引发了人们对转移动机的研究与思考。传统的解释有两种：利他主义与交换互惠。本文利用CHARLS数据，对中国的代际转移动机进行实证研究，发现受传统文化的影响，中国的代际转移更多地表现出利他主义倾向，同时示范效应也有所体现，即个体在照顾父母的同时也在教育自己的孩子赡养父母，以期退休后得到子女的照顾。相对西方国家来说，我国养老金体系的压力较小。但随着老龄化的加剧和生育率的下降，为了缓解未来独生子女赡养双方父母的压力，应当在减少挤出私人代际转移的基础上完善社会保障体系，提高我国老年人口的生活质量。     

Jointly determined saving and fertility behaviour: theory,and estimates for Germany,Italy, UK and USA

This study uses new theories of capital accumulation and fertility in a comparative framework to test predictions with time-series data for Germany, Italy, the UK, and the US. The exogenous-fertility model is based on models of Barro and Becker. The endogenous-fertility models are based on models of Veall and Nishimura and Zhang. It is assumed that life cycle periods are youth, middle age, and old age. Several theoretical frameworks are tested with endogenous and exogenous fertility and altruism and nonaltruism. Data are obtained during 1950-90. Dependent variables are the total lifetime fertility rate and real per capita household savings. Explanatory variables include social security, the real social security deficit per capita, the real rate of interest, the real per capita disposable income, the average male real wage rate, the average female real wage rate, and the real child benefit rate. The explanatory variables are individually graphed to show differences by country over time. Findings suggest that fertility is endogenous in a nonaltruistic model. The only model not rejected by the data was the model in which fertility and intergenerational transfers were explained by nonaltruistic concerns. Fertility was positively affected by the male wage rate in all countries. Fertility was negatively affected by the female wage rate in all countries. Disposable income was insignificant in the UK and Germany and positive and significant in Italy and the US. The interest rate was significant in only 1 model. Child benefits had a positive and significant effect on fertility in the UK. In savings models, disposable income was significant and positive, and child benefits and wage rates were insignificant. Social security coverage had a negative effect on fertility and a positive effect on savings, except in Germany. Findings indicate that saving and fertility are jointly determined.     

不同生育率情形下养老保险筹资模式比较研究

理论研究普遍认为,基金制养老保险筹资模式优于现收现付制,但这几乎都是基于人均资本视角的判断。本文在外生和内生生育率两种情形下,从福利经济学视角分析基金制是否完全优于现收现付制。理论模型表明,在一定参数组合下,无论外生生育率还是内生生育率,都存在使现收现付制下社会福利高于基金制下社会福利的养老保险缴费率。模型的数值模拟显示,存在使现收现付制下社会福利更高的养老保险缴费率,且在外生生育率下（符合我国生育政策）现收现付制缴费率在12%左右社会福利最高,内生生育率下（符合发达国家生育政策）现收现付制缴费率在6%左右社会福利最高。前一数值与已有研究成果观点相近(我国社会统筹部分缴费率应下降到15%左右),后一数值与美国（62%）、日本（77%）等发达国家现收现付制养老保险缴费率相近。稳健性检验显示,只要参数赋值在合理范围内,数值模拟主要结论不变。本文为降低现行我国社会统筹部分养老保险缴费率提供了理论借鉴。     

Optimal accumulation in an endogenous growth setting with human capital

This paper considers a three-overlapping-generations model of endogenous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure efficiency grounds, the case for generous public pensions is rather weak.     

Economic growth and stability with public pay-as-you-go pensions and private intra-family old-age insurance

This paper compares the steady-state and dynamic outcomes of two historical alternatives as a means of old-age insurance, namely, voluntary intra-family transfers from young to old members versus pay-as-you-go public pensions, in a general equilibrium overlapping generations model with children as a desirable good. We show that the shift from a private system of old-age support to public pensions increases the gross domestic product (GDP) per worker. Moreover, although in both cases the steady-state stock of capital, under myopic expectations, may be (globally) unstable depending on the size of the inter-generational transfer, we show that the existence of public pensions rather than private intra-family gifts considerably reduces the possibility of cyclical instability.     

The old-age security hypothesis revisited

"Children's altruism toward parents is allowed in a two-overlapping-generations model with endogenous fertility. Parents raise children because, when retired, they expect gifts from their children who are essentially a capital good. Individuals' behavior between generations is examined by analyzing a Nash equilibrium, which is then compared with a social planner's optimal allocation. The pay-as-you-go public pension program is viewed as the optimal gifts from the optimal allocation when the latter is implemented. The effect on fertility of the introduction of a capital market is also analyzed. The validity of the old-age security hypothesis is shown to depend on the parameters of utility and cost functions."     

THE WEALTH EFFECTS OF INCOME INSURANCE

Precautionary savings models suggest that wealth should rise with income risk. Risk is reduced by means-tested transfers, however, which implies that transfer programs should discourage private wealth accumulation. We offer a comprehensive empirical assessment based on variation across states in the generosity of a number of programs, specifically unemployment insurance and means-tested transfers (Aid to Families with Dependent Children and Food Stamps). We use monthly data on married couples from the Survey of Income and Program Participation (SIPP) to regress wealth on income, income risk, and various measures of transfer generosity. The results support the precaution-ary savings model and reveal moderate negative wealth effects of both unemployment insurance and means-tested transfers, with an elasticity of about −0.18.     

我国省级公共资本经济效应分析——基于面板VAR模型的实证分析

在现有文献研究的基础上,利用1999—2010年我国29个省(自治区、直辖市)的面板数据,基于内生增长理论构建计量经济模型,检验了公共资本存量、私人资本存量与经济增长之间的面板Granger因果关系。构建面板VAR模型度量公共资本存量对经济的冲击。结果表明:公共资本存量的冲击对人均私人资本存量和人均GDP都产生正向影响,但长期看该影响不具有持续效应。     

How Much is Transfer and How Much is Insurance in a Pay‐as‐you‐go System? The German Case

Pay-as-you-go pension systems provide insurance against longevity-related old-age poverty and related risks. They are commonly also used as instruments for redistribution. This paper provides several estimates of the insurance and transfer share of the German public pension system. Estimating these shares is important because they are indicative of taxation-related deadweight losses and influence public acceptance of the pension system. We also disentangle intragenerational from intergenerational transfers. Although our estimate of intragenerational transfers is smaller than recent semi-official estimations, such transfers create substantial deadweight losses. Intergenerational transfers are much larger, thereby contributing to strong negative participation incentives for the younger generation.
JEL classification : H 55; J 26     

Political viability of public pensions and education. An empirical application

Public intergenerational transfers (IGTs) may emerge from the failure of private arrangements to provide optimal economic resources for the young and old. We investigate the political sustainability of the public system of IGTs by seeking to determine the outcome if the decision to reallocate economic resources per se was put to the vote. Exploiting the particular nature of the data from the National Transfer Accounts data in a political economy application in which generations cooperate under certain conditions, we show that most of the developed countries would vote in favour of a joint public education and pension system.     

Intergenerational transfers,demographic transition,and altruism: Problems in developing Asia

This paper develops a three‐period overlapping‐generations model where middle‐aged agents care about not only their own lifetime utility but also their old parents' and children's well‐being. The doubly altruistic agents choose amounts of intergenerational transfers to their old parents and children as well as private savings. The government specifies amounts of public transfers from working adults to the dependents. The model also takes the effects of demographic transition on the burdens of supporting the elderly and children into account. Using 23 countries' data from the National Transfer Accounts (NTA ), we estimate the degrees of filial and parental altruism and adjust them for their respective life expectancy and fertility rates. The findings suggest that people in developing countries are more parentally altruistic than those in developed ones while the adjusted degree of filial altruism tends to be low in developing Asia. Our welfare analyses reveal that the developing Asian countries must introduce more comprehensive public welfare programs for the elderly to maximize social welfare. Moreover, their low adjusted degree of filial altruism may trap the developing Asian countries at the low levels of public old‐age support and social welfare as the further demographic transition ensues.     

Decreasing fertility,economic growth and the intergenerational wage gap

Persistent low fertility rates lead to lower population growth rates and eventually also to decreasing population sizes in most industrialized countries. There are fears that this demographic development is associated with declines in per capita GDP and possibly also increasing inequality of the wage distribution. We investigate whether this is true in the context of neoclassical growth models, augmented with endogenous fertility decisions and endogenous educational decisions. Furthermore we allow for imperfect substitutability across workers of different age in the production process and learning by doing effects as well as human capital depreciation. In particular, we assess the intergenerational wage redistribution effects which follow after a demographic change to persistent low fertility rates.     

TECHNOLOGICAL PROGRESS AND POPULATION GROWTH: DO WE HAVE TOO FEW CHILDREN?

Do we have too few children? We intend to address this question. In developed countries, the fertility rate has declined since WWII. This may cause a slowdown in the growth of GDP in developed countries. However, important factors for the well‐being of individuals are per capita variables, like per capita growth and per capita consumption. In turn, the rate of technological progress determines the growth rates of per capita variables. If the population size is increasing, the labour inputs for R&D activity increase, and thus speed up technological progress. As individuals do not take account of this positive effect when deciding on the number of their own children, the number of children may become smaller than the socially optimal number of children. However, an increase in the number of children reduces the assets any one child owns: that is, there is a capital dilution effect. This works in the opposite direction. We examine this issue using an endogenous growth model where the head of a dynastic family decides the number of children.     

Mortality, Fertility, and Saving in a Malthusian Economy

We develop a model of fertility choice by utility maximizing households, based on an explicit notion of intergenerational external effects. In contrast to previous economic literature, we assume that the external effects run from children to parents. This gives rise to a fundamentally different reason for bearing of children, as parents expect to be cared for, at least partially, by their children in their old age. We take the behavior of infant mortality since 1541 as the key exogenous variable and endogeneize the size of the transfer from children to parents by linking it to the endogenous savings and fertility choice of the parents. This generates a dynamic model of a Malthusian society that performs substantially better, qualitatively and quantitatively, than previous economic models of endogenous fertility.     

Human capital and economic development

This paper develops a general equilibrium model of fertility and human capital investment with young adult mortality. Because young adult mortality is negatively related to average young adult human capital, human capital accumulation lowers mortality, inducing demographic transition and industrial revolution. Data confirm that young adult mortality is related negatively to schooling, and the rate of return to schooling, and positively to fertility. The data indicate a negative relationship between TFP growth and schooling accumulation. The model fits the data on country populations, per capita incomes, human capital, total fertility rates, infant mortality, life expectancy and conditional life expectancy.