In a Le Monde op-ed, demographer Hervé Le Bras argues that immigration is a miracle solution against the falling birth rate threatening pension funding. He contrasts the solidarity of pay-as-you-go systems with individualistic capitalization. The active generation, he says, consumes for its children and pays retirees' pensions.
During pension reform debates, several deputies identified the falling birth rate as the greatest threat to the pay-as-you-go system. Soon, they claim, there will be more pensioners and fewer contributors, increasing the burden on workers. This will occur in more than twenty years, when the low numbers of current babies enter the job market.
Liberal deputies revived capitalized retirement, where the worker-to-retiree ratio does not matter, only the yield of funds. Yet Hervé Le Bras notes this system rivals birth rates: raising a child diverts financial resources that could fund retirement. Antoine Math's research at the Institut de recherches économiques et sociales (IRES) estimates 650 euros monthly after state aid, totaling 156,000 euros from birth to age 20, a similar figure in neighboring countries.
If invested in pension funds, these sums would enhance future retirement. The liberal Homo economicus thus has no incentive for descendants, radically opposing capitalization and pay-as-you-go on birth rates.
In pay-as-you-go, workers' contributions directly fund retirees' pensions, 81% of whom are their children. The child generation largely finances its parents' retirements. Childless retirees rely on others' children contributions, labeled a 'free rider.' They will counter that their pension offsets past contributions.