Pay-as-you-go financed public pensions in a model of endogenous growth andfertility

Employing an overlapping generations endogenous growth model in which paren ts derive utility from having children and, additionally, expect children t o support them in old age, this paper explores the interrelation between gr owth, fertility, and the size of pay-as-you-go financed public pensions. It is shown that small sized public pensions stimulate,per capita income grow th, but further increases in public pensions eventually reduce it. Fertilit y, on the other hand, falls by an increase in public pensions if they are e ither small or large. Medium sized public pensions, however, may stimulate fertility. JEL classification: H55, J13, O41.