Working Paper: CEPR ID: DP1734
Authors: Hanswerner Sinn
Abstract: It is shown that the net fiscal externality created by an additional member of a pay-as-you-go-pension system that is endowed with individual accounts equals the gross contributions of this member. In Germany, this equals about 175,000 Deutsche marks. The paper uses this information to design a hybrid funded system that avoids this externality and improves the public pension system under equity and efficiency considerations.
Keywords: pay-as-you-go pension systems; immigration; children
JEL Codes: H55; J6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Birth of a child (J13) | Financial sustainability of the pension system (H55) |
| Immigrant contribution (J61) | Financial sustainability of the pension system (H55) |
| Family investment in children (D14) | Financial health of the pension system (G23) |
| Structure of the pension system (H55) | Fertility decisions (J13) |
| Fertility decisions (J13) | Pension crisis (H55) |