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Social Security Reform in an Economy with Population Aging

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  • Shinichi Nishiyama

Abstract

This paper analyzes the macroeconomic and welfare effects of population aging and Social Security reform. First, a stochastic overlapping-generations model with heterogeneous agents is carefully extended to an aging society. The model uses the intermediate population projection of the Trustee Report, and it generates baseline economies as equilibrium transition paths starting year 1961. Under this reasonable aging assumption, per capita labor supply will decrease in the long run, and per capita national wealth will increase compared to the balanced growth path, although the private saving rate will be declining. Then, the paper analyzes three stylized but realistic Social Security reform plans that cut benefits, increase the payroll tax cap, and introduce personal savings accounts with benefit offsets

Suggested Citation

  • Shinichi Nishiyama, 2004. "Social Security Reform in an Economy with Population Aging," Econometric Society 2004 North American Winter Meetings 582, Econometric Society.
    • Handle: RePEc:ecm:nawm04:582
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    References listed on IDEAS

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    8. Douglas W. Elmendorf & Louise M. Sheiner, 2000. "Should America Save for Its Old Age? Fiscal Policy, Population Aging, and National Saving," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 57-74, Summer.
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    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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