The generation contract, pension schemes, birth control and economic growth: A European model for the third world?

Abstract

The paper presents an analysis of the relationship between the generation contract, pension schemes, fertility decline and the process of economic growth. It is shown that there is a close connection between the reproductive behavior of a population and social security in old age i.e. the introduction and effects of retirement insurances. The proof of this assumption is given by a historical analysis of the developed and a systematic analysis of the developing countries. The paper postulates that the intention to create a higher level of economic growth in developing countries will become effective if a change of the family-bound generation contract is brought about. A modern economy is not compatible with the traditional system of extended families. This thesis includes the assumption that a statutory pension scheme is not an economic burden but the very starting point of a social machine which triggers economic growth.