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Longevity and PAYG pension systems sustainability

Author

Listed:
  • Luca Gori

    () (University of Pisa)

  • Luciano Fanti

    () (University of Pisa)

Abstract

In 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.

Suggested Citation

  • Luca Gori & Luciano Fanti, 2008. "Longevity and PAYG pension systems sustainability," Economics Bulletin, AccessEcon, vol. 10(2), pages 1-8.
  • Handle: RePEc:ebl:ecbull:eb-08j20002
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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume10/EB-08J20002A.pdf
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    References listed on IDEAS

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    1. Alberto Bucci & Davide Torre, 2009. "Population and economic growth with human and physical capital investments," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), pages 17-27.
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    4. Frederic Tournemaine, 2007. "Can population promote income per-capita growth? A balanced perspective," Economics Bulletin, AccessEcon, vol. 15(8), pages 1-7.
    5. Stephan Klasen & David Lawson, 2007. "The Impact of Population Growth on Economic Growth and Poverty Reduction in Uganda," Departmental Discussion Papers 133, University of Goettingen, Department of Economics, revised 25 May 2007.
    6. Alberto Bucci & Davide Torre, 2009. "Population and economic growth with human and physical capital investments," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), pages 17-27.
    7. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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    Citations

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    Cited by:

    1. Luciano Fanti & Luca Gori, 2012. "PAYG Pensions and Economic Cycles," Public Finance Review, , vol. 40(2), pages 240-269, March.
    2. Du Cai Cai & Muysken Joan & Sleijpen Olaf, 2010. "Economy wide risk diversification in a three-pillar pension system," Research Memorandum 055, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    3. Luciano Fanti, 2015. "Growth, PAYG pension systems crisis and mandatory age of retirement," Economics Bulletin, AccessEcon, vol. 35(2), pages 1160-1167.
    4. Luciano Fanti, 2012. "PAYG pensions and fertility drop: some (pleasant) arithmetic," Discussion Papers 2012/146, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    5. Giam Cipriani, 2014. "Population aging and PAYG pensions in the OLG model," Journal of Population Economics, Springer;European Society for Population Economics, pages 251-256.
    6. 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.
    7. Luciano Fanti, 2012. "Consequences of a boost of mandatory retirement age on long run income and PAYG pensions," Discussion Papers 2012/149, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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