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Aging, social security design, and capital accumulation


  • Dedry, Antoine
  • Onder, Harun
  • Pestieau, Pierre


This paper analyzes the impact of demographic aging on capital accumulation and welfare in economies with unfunded pensions. By using a two-period overlapping generations model with potentially endogenous retirement decisions, it shows that both the type of aging, i.e. declining fertility or increasing longevity, and the type of pension system, i.e. defined contributions or defined benefits, are important in understanding this impact. Results show that when aging is driven by an increasing longevity, unregulated retirement age systems lead to greater improvements in welfare. In contrast, with a decreasing fertility, mandatory retirement systems with defined contributions fare better.

Suggested Citation

  • Dedry, Antoine & Onder, Harun & Pestieau, Pierre, 2017. "Aging, social security design, and capital accumulation," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 145-155.
  • Handle: RePEc:eee:joecag:v:9:y:2017:i:c:p:145-155 DOI: 10.1016/j.jeoa.2016.10.003

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    References listed on IDEAS

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    Cited by:

    1. Willem Devriendt & Freddy Heylen, 2017. "Macroeconomic Effects Of Demographic Change In An Olg Model For A Small Open Economy - The Case Of Belgium -," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 17/931, Ghent University, Faculty of Economics and Business Administration.
    2. Friese, Max, 2017. "The interplay between trade unions and the social security system in an aging economy," Thuenen-Series of Applied Economic Theory 148, University of Rostock, Institute of Economics.
    3. Ziesemer, Thomas, 2018. "The serendipity theorem for an endogenous open economy growth model," MERIT Working Papers 001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Kristina Karagyozova-Markova, 2016. "Evaluating the effects of population ageing on long-term growth and pension system sustainability in Bulgaria through an overlapping generations model," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 59-78.
    5. Edle von Gaessler, Anne & Ziesemer, Thomas, 2017. "Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. World Bank Group, 2015. "Russian Economic Report, September 2015," World Bank Other Operational Studies 22714, The World Bank.
    7. repec:eee:ecolet:v:162:y:2018:i:c:p:56-61 is not listed on IDEAS

    More about this item


    Aging; Public finance sustainability; Social security;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • H8 - Public Economics - - Miscellaneous Issues


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