@article{54c476d3b9064467ab804dd7fd8f09c7,
title = "Fertility decline and a pay-as-you-go pension system in a two-sector model",
abstract = "We investigate how fertility decline affects the benefit of a pay-as-you-go pension using a two-sector overlapping generations model. We show that whether fertility decline reduces pension benefits is determined by the capital intensity ranking between the two sectors. When the consumption-goods sector is capital-intensive, fertility decline decreases pension benefits. Contrastingly, when the investment-goods sector is capital-intensive, the size of the price elasticity determines whether fertility decline reduces pension benefits. When elasticity is sensitive, fertility declines increase pension benefits. We also present numerical simulations. Our results suggest that, although it remains theoretically possible that fertility decline increases pension benefits, such a paradoxical result is unlikely to occur.",
keywords = "fertility, pay-as-you-go pension system, two-sector model",
author = "Kojun Hamada and Akihiko Kaneko and Mitsuyoshi Yanagihara",
note = "Funding Information: The authors thank two anonymous referees and the editor, Professor Neri Salvadori, for their valuable and constructive suggestions, which have substantially helped to improve this paper. We also thank Tsuyoshi Shinozaki, Hideya Kato, and the participants of Public Economic Theory 2019 held at Universit{\`e} de Strasbourg in Strasbourg, France and the participants of the Waseda University Faculty Seminar. This work was supported in part by a Waseda University Grant for Special Research Projects No. 2020Q‐001 (Kaneko), JSPS KAKENHI [grant numbers 19K01679 (Hamada, Kaneko, and Yanagihara); 20K01629 (Hamada); 17K03727 (Kaneko); 17K03762, 19H01505 (Yanagihara)]. The authors are solely responsible for any remaining errors. Publisher Copyright: {\textcopyright} 2021 John Wiley & Sons Ltd",
year = "2021",
doi = "10.1111/meca.12371",
language = "English",
journal = "Metroeconomica",
issn = "0026-1386",
publisher = "John Wiley and Sons Inc.",
}