TY  - JOUR
AU  - Sinn,Hans-Werner
TI  - The Pay-As-You-Go Pension System as a Fertility Insurance and           Enforcement Device
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6610
PY  - 1998
Y2  - June 1998
UR  - http://www.nber.org/papers/w6610
L1  - http://www.nber.org/papers/w6610.pdf
N1  - Author contact info:
Hans-Werner Sinn
Ifo Institute -
Leibniz Institute for Economic Research
at University of Munich
Poschingerstr. 5
81679 Munich
GERMANY
Tel: 49-89-21802748
Fax: 49-89-397303;49-89-8506434 (home)
E-Mail: sinn@ifo.de
AB  - It is argued that a PAYGO system may have useful allocative functions in that it serves as an insurance against not having children and as an enforcement device for  rotten kid' who are unwilling to pay their parents a pension.  It is true that the system has amoral hazard effect in terms of reducing the investment in human capital, but, if it is run on a sufficiently small scale this effect will not strong enough to prevent a welfare improvement. If scale of the system is so large that parents bequeath some of their pensions to their children overdrawn and creates unnecessarily strong disincentives for human capital investment.
ER  -