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Pay-As-You-Go Pension, Bargaining Power, and Fertility

2018; Mohr Siebeck Verlag; Volume: 74; Issue: 2 Linguagem: Inglês

10.1628/fa-2018-0003

1614-0974

Mizuki Komura, Hikaru Ogawa,

Retirement, Disability, and Employment

The effects of pension policies on fertility have been examined in the overlapping-generations (OLG) model of the unitary household in which no heterogeneity exists between wife and husband. This study departs from the OLG model to focus on marital bargaining arising from heterogeneity in a nonunitary model. Specifically, this paper examines how pension policies affect the fertility of a bargaining couple with different life spans. The analysis reveals a new channel from pension policies to fertility decisions, whereby an increase in pension size affects fertility not only via the changes in current and future income but also through a change in marital bargaining power. This result suggests that an increase in a pay-as-you-go pension may induce a negative effect on fertility through women's empowerment.