How to Avoid a Pension Crisis: A Question of Intelligent System Design

Posted: 22 Feb 2010

See all articles by Alessandro Cigno

Alessandro Cigno

Department of Economics and Management, University of Florence; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics; Centre for Household, Income, Labour and Demographic Economics (CHILD)

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Date Written: March 2010

Abstract

Conventional pension systems suffer from a design defect, which makes them financially unsustainable, and a source of inefficiency for the economy as a whole. The article outlines a second-best policy which includes a public pension system made up of two parallel schemes, a Bismarckian one allowing individuals to qualify for a pension by working and paying contributions in the usual way, and an unconventional one allowing them to qualify for a pension by having children, and investing time and money in their upbringing.

Keywords: Pension reform, implicit pension taxes and subsidies, child benefits, fertility, labour productivity

JEL Classification: D13, D64, H55, J13, J14, J26

Suggested Citation

Cigno, Alessandro, How to Avoid a Pension Crisis: A Question of Intelligent System Design (March 2010). CESifo Economic Studies, Vol. 56, Issue 1, pp. 21-37, 2010. Available at SSRN: https://ssrn.com/abstract=1555544 or http://dx.doi.org/ifp024

Alessandro Cigno (Contact Author)

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