Fertility, Union Wage Setting, and Social Security System in an OLG model
15 Pages Posted: 30 Jun 2015 Last revised: 25 Aug 2016
Date Written: December 30, 2015
Abstract
This study analyzes how a social security system consisting of a public pension, child allowances, and unemployment insurance affects endogenous fertility and unemployment when the wage level is endogenously set by monopolistic trade unions in an overlapping generations model (OLG) model. The analysis reveals that, first, increased pension tax rates lead to a higher fertility rate when wages are higher but a lower rate when wages are lower. Second, an increased child allowances tax rate leads to an increased fertility rate when wages are lower but a decreased rate when wages are higher. Therefore, both social security and wage setting should be considered in order to improve fertility and reduce unemployment.
Keywords: fertility, unemployment, trade unions, social security, overlapping generations model
JEL Classification: J13, J51, J65
Suggested Citation: Suggested Citation