Longevity and PAYG pension systems sustainability
AbstractIn this paper we study the effects of an increasing longevity on the balanced pay-as-you-go pension budget in the basic overlapping generations model of growth (Diamond, 1965). It is shown that, when the capital's share in production is sufficiently high, the higher longevity the higher pension benefits. The policy implication is that there would be room for an increase, rather than the often threatened reduction, in future pension payments, by keeping unaltered the contribution rate paid by the young to finance pensions to retired people as well as a balanced PAYG pension budget.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 10 (2008)
Issue (Month): 2 ()
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- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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- Luciano Fanti, 2012. "Growth, PAYG pension systems crisis and mandatory age of retirement," Discussion Papers 2012/153, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
- Luciano Fanti, 2012. "PAYG pensions and fertility drop: some (pleasant) arithmetic," Discussion Papers 2012/147, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
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