Population Growth Rate, Life Expectancy and Pension Program Improvement in China
AbstractApplying an overlapping-generations model with lifetime uncertainty, we examine in this paper Chinas partially funded public pension system. The findings show that the individual contribution rate does not affect the capital-labor ratio but the firm contribution rate does. The optimal firm contribution rate depends on the capital share of income, social discount factor, survival probability, and population growth rate. The simulation results indicate that the optimal firm contribution rate rises with Chinas life expectancy but, surprisingly, falls with the population growth rate. We demonstrate that the optimal firm contribution rate should be cut when the effect of falling population growth rate is greater than that of rising life expectancy and that the rate is much more sensitive to the population growth rate than to life expectancy. This paper also solves the optimal interval to cope with Chinas population aging peak in the 2030s.
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Bibliographic InfoArticle provided by De Gruyter in its journal Asia-Pacific Journal of Risk and Insurance.
Volume (Year): 2 (2008)
Issue (Month): 2 (March)
Contact details of provider:
Web page: http://www.degruyter.com
Other versions of this item:
- Yang, Zaigui, 2008. "Population Growth Rate, Life Expectancy and Pension Program Improvement in China," MPRA Paper 18789, University Library of Munich, Germany.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
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