How to Avoid a Pension Crisis: A Question of Intelligent System Design
Posted: 22 Feb 2010
Date Written: March 2010
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: Suggested Citation