1 Heterogeneous Households, Child Allowance, and Social Security- An Overlapping Generations Model with Endogenous Fertility –

In this paper, we assume that households have different preferences for having children. This assumption leads to differences in the predicted number of children borne by households. In our model, three types of households exist: households with some children and no savings, those with some children and savings, and those with no children and some savings. We calibrate the influence on the social welfare and the transition when the government increases the child allowance rate in Japan. The simulation shows that the optimal rate of child allowance is higher than the actual rate