Public Education and Child-Care Policies with Pay-As-You-Go Pension

This paper presents consideration of the effects of child allowances and subsidies for private education investment on fertility and private education investment. The level of public education expenditure plays an important role in the effects of child care policies. To raise fertility, although child allowances are effective in an economy with low public education investment, subsidies for education investment are effective in an economy for which public education investment is high. The results presented in this paper are helpful for reconciling the conflicting results reported from previous studies. In addition, this paper presents an examination of the effects of those child care policies on pension benefits. A subsidy for private education can raise both fertility and pension benefits