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Fertility policies and social security reforms in China

Coeurdacier, Nicolas and Guibaud, Stéphane and Jin, Keyu (2014) Fertility policies and social security reforms in China. IMF Economic Review, 62 (3). pp. 371-408. ISSN 2041-4161

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Identification Number: 10.1057/imfer.2014.19

Abstract

This paper analyzes the impact of relaxing fertility controls and expanding social security in China. We develop an overlapping generations model in which fertility decisions and capital accumulation are endogenously determined in the presence of social security. In our model, children are an alternative savings technology—as they transfer resources to their retired parents. Important feedback links arise between fertility and social security variables: an expansion of social security benefits reduces fertility—partially offsetting the effects of relaxing the one-child policy. The feedback loop between social security variables and fertility suggests that abandoning fertility restrictions may not be as effective in helping to finance China’s intended pension reform, especially if children are an important source of old-age support. The sustainability of the pension system is particularly at risk in the event of a growth slowdown. The objective of pension reforms may also be incongruent with other reforms, such as financial liberalization and financial integration.

Item Type: Article
Official URL: http://www.palgrave-journals.com/imfer/index.html
Additional Information: © 2014 International Monetary Fund
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HN Social history and conditions. Social problems. Social reform
H Social Sciences > HQ The family. Marriage. Woman
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E21 - Macroeconomics: Consumption; Saving; Aggregate Physical and Financial Consumer Wealth
H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
J - Labor and Demographic Economics > J1 - Demographic Economics > J11 - Demographic Trends and Forecasts
J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility; Family Planning; Child Care; Children; Youth
Sets: Departments > Economics
Collections > Economists Online
Date Deposited: 14 Apr 2016 09:48
Last Modified: 14 Apr 2016 09:59
URI: http://eprints.lse.ac.uk/id/eprint/66107

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