Ageing and Pension Reform in a Small Open Economy: The Role of Savings Incentives
AbstractIn this paper we analyse the effects of ageing in a small open economy with a representative government. More specific, we adress the question whether in case of ageing a transition from an unfunded to a more funded pension scheme is politically feasible. We show that the existence of a suitable subsidy on savings is crucial in this respect. Without a subsidy on savings, the economy is trapped at the preexisting level of saving and ageing leads to an increase of the PAYG tax. However, if a subsidy exists which is linked to the tax rate in a non-linear way a conversion from PAYG to funded pensions is politically feasible.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1998-90.
Date of creation: 1998
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ageing; overlapping generations; pensions;
Find related papers by JEL classification:
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-11-20 (All new papers)
- NEP-DGE-1998-11-20 (Dynamic General Equilibrium)
- NEP-HEA-1998-11-20 (Health Economics)
- NEP-PBE-1998-11-20 (Public Economics)
- NEP-PUB-1998-11-20 (Public Finance)
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