Title: Returns Analysis From PAYGO System to Fund Accumulation System:Theoretical Analysis and Simulation of Overlapping Generations Model with Implicit Debt
Abstract: As population aging intensifies,China's current social security system with a notional individual account is not sustainable.Growing concerns have been presented over the transition from a pay-as-you-go(PAYGO) system to a fund accumulation system in recent years.The paper explores an overlapping generations model to examine the returns from this transition by taking the implicit pension debt caused by such a transition into consideration.If redistribution over generations is not allowed,it shows that after repaying implicit pension debt these two systems are equivalent.There are no gains from this transition.However,if redistribution over generations is allowed,it shows that only first generation endures a lower consumption and the future generations are all better off.Adding the present value of losses and gains together,the returns exceed the loss.Therefore,the returns of the whole society increase through the transition under intergenerational redistribution.
Publication Year: 2010
Publication Date: 2010-01-01
Language: en
Type: article
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Cited By Count: 1
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