Journal Article

Fiscal and welfare effects of raised fertility in Poland: Overlapping generations model estimates

Many countries consider raising fertility through profamily policies as a solution to the fiscal pressure stemming from population aging. However, an increased number of births implies immediate private costs and only delayed public benefits of a younger and larger population. We propose using an overlapping generations model with a rich family structure to quantify the effects of simulated increases in birth rates and apply it to Poland. We analyze the overall macroeconomic and welfare effects of these simulated paths relative to status quo. We also study the distribution of these effects across cohorts and study the sensitivity of the final effects to the assumed target value and path of increased fertility. Since our study tries to quantify the possible effects of pronatalist policies, we focus on public costs and the benefits of having children. We find that fiscal effects are positive but fall short of the pronatalist expenditures in Poland, and likely many countries. The sign and the size of both welfare and fiscal effects depend on the patterns of increased fertility.

Published in a peer-reviewed journal of the Population Council.