March 2009
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 paper 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: [D130] Household Production and Intrahouse Allocation [D640] Altruism [H550] Social Security and Public Pensions [J130] Fertility; Family Planning; Child Care; Children; Youth [J140] Economics of the Elderly; Economics of the Handicapped [J260] Retirement; Retirement Policies
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Alessandro Cigno cigno@unifi.it
