Increasing PAYG pension benefits and reducing contribution rates
We analyse how a reduced contribution rate affects the balanced pay-as-you-go pension budget in the basic overlapping generations model of neoclassical growth (Diamond, P., 1965. National debt in a neoclassical growth model. American Economic Review 55 (5), 1126-1150). It is shown that PAYG pensions can be increased by reducing the payroll tax paid by the young contributors.
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- Rowena A. Pecchenino & Patricia S. Pollard, 2005.
"Aging, Myopia, and the Pay-As-You-Go Public Pension Systems of the G7: A Bright Future?,"
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1995-001, Federal Reserve Bank of St. Louis.
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