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Longevity, Grandparents Caring, and PAYG Pensions

Author

Listed:
  • Wei Gao

    (School of Economics, Central University of Finance and Economics)

  • Chengliang Yan

    (School of Economics, Central University of Finance and Economics)

  • Fuyang Zhao

    (School of Economics, Central University of Finance and Economics)

Abstract

This paper presents an OLG model with endogenous grandparents caring. We show that the increase of longevity has positive effects on grandparents caring, which in turn increases adults' labor supply, and reinforces the positive effect of longevity on pension benefits. Contrary to existing literature, we find that under plausible parameter values, increasing longevity may improve pension benefits. This indicates that population aging driven by increasing longevity may not be a threat to the sustainability of the PAYG pension system.

Suggested Citation

  • Wei Gao & Chengliang Yan & Fuyang Zhao, 2021. "Longevity, Grandparents Caring, and PAYG Pensions," Annals of Economics and Finance, Society for AEF, vol. 22(2), pages 451-465, November.
    • Handle: RePEc:cuf:journl:y:2021:v:22:i:2:gaoyanzhao
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    More about this item

    Keywords

    Increasing Longevity; Grandparents Caring; Pensions; Overlapping Generations Model;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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