IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp9969.html
   My bibliography  Save this paper

Aging, Retirement and Pay-As-You-Go Pensions

Author

Listed:
  • Cipriani, Giam Pietro

    (University of Verona)

Abstract

In this paper we consider the effects of population aging on a pay-as-you-go financed defined contributions pension scheme. We show that when retirement decisions are endogenous, aging increases the retirement age and the steady state level of capital. The effect on pension payouts is in general ambiguous, except for the solution of full retirement, when this effect is unambiguously negative.

Suggested Citation

  • Cipriani, Giam Pietro, 2016. "Aging, Retirement and Pay-As-You-Go Pensions," IZA Discussion Papers 9969, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9969
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp9969.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michel, Philippe & Pestieau, P, 1993. "Population Growth and Optimality: When Does Serendipity Hold?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(4), pages 353-362, November.
    2. Philippe Michel & Pierre Pestieau, 2013. "Social Security And Early Retirement In An Overlapping-Generations Growth Model," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 723-737, November.
    3. Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2011. "Fertility, human capital accumulation, and the pension system," Journal of Public Economics, Elsevier, vol. 95(11), pages 1272-1279.
    4. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
    5. Berthold U. Wigger, 1999. "Public Pensions and Growth," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 56(2), pages 241-241, June.
    6. Cabo, Francisco & García-González, Ana, 2014. "The Endogenous Determination Of Retirement Age And Social Security Benefits," Macroeconomic Dynamics, Cambridge University Press, vol. 18(1), pages 93-113, January.
    7. Giam Cipriani, 2014. "Population aging and PAYG pensions in the OLG model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(1), pages 251-256, January.
    8. Mizuno, Masakatsu & Yakita, Akira, 2013. "Elderly labor supply and fertility decisions in aging-population economies," Economics Letters, Elsevier, vol. 121(3), pages 395-399.
    9. Luciano Fanti & Luca Gori, 2012. "Fertility and PAYG pensions in the overlapping generations model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 955-961, July.
    10. Fisher, Walter H. & Heijdra, Ben J., 2012. "Growth, Pensions, And The Aging Joneses," Macroeconomic Dynamics, Cambridge University Press, vol. 16(1), pages 35-60, February.
    11. Rosa Aísa & Fernando Pueyo & Marcos Sanso, 2012. "Life expectancy and labor supply of the elderly," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 545-568, January.
    12. Bagchi, Shantanu, 2016. "Is The Social Security Crisis Really As Bad As We Think?," Macroeconomic Dynamics, Cambridge University Press, vol. 20(3), pages 737-776, April.
    13. Berthold U. Wigger, 1999. "Pay-as-you-go financed public pensions in a model of endogenous growth and fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 625-640.
    14. Alders, Peter & Broer, D. Peter, 2005. "Ageing, fertility, and growth," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1075-1095, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Partha Sen, 2020. "Postponing Retirement and Social Security in a Two Sector Model," CESifo Working Paper Series 8751, CESifo.
    2. Chen Hung-Ju & Miyazaki Koichi, 2022. "Pay-as-You-Go Social Security and Educational Subsidy in an Overlapping Generations Model with Endogenous Fertility and Endogenous Retirement," The B.E. Journal of Macroeconomics, De Gruyter, vol. 22(2), pages 787-820, June.
    3. Wei Gao & Chengliang Yan & Fuyang Zhao, 2021. "Longevity, Grandparents Caring, and PAYG Pensions," Annals of Economics and Finance, Society for AEF, vol. 22(2), pages 451-465, November.
    4. Maria Teresa Medeiros Garcia & André Fernando Rodrigues Rocha da Silva, 2019. "Assessing Pension Expenditure Determinants – the Case of Portugal," Working Papers REM 2019/68, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    5. Jaimes, Richard & Westerhout, Ed, 2023. "Optimal policies in an ageing society," The Journal of the Economics of Ageing, Elsevier, vol. 26(C).
    6. Hirono, Makoto & Mino, Kazuo, 2019. "Pension, Retirement, and Growth in the Presence Heterogeneous Elderly," MPRA Paper 98096, University Library of Munich, Germany.
    7. Hott, Christian, 2019. "Save or pay-as-you-go: The effcts of ageing on optimal retirement funding," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203642, Verein für Socialpolitik / German Economic Association.
    8. Matthias Schön, 2023. "Demographic change and the rate of return in pay-as-you-go pension systems," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1799-1827, July.
    9. Maria Teresa Medeiros Garcia & André Fernando Rodrigues Rocha da Silva, 2023. "Pension expenditure determinants: the case of Portugal," Public Sector Economics, Institute of Public Finance, vol. 47(2), pages 177-203.
    10. Marina Tabatadze, 2019. "Optimal Structure of Pension System and Its Influence on the Social Policy of State Budget," Proceedings of the 13th International RAIS Conference, June 10-11, 2019 03 MT, Research Association for Interdisciplinary Studies.
    11. Hirono, Makoto & Mino, Kazuo, 2020. "Pension Reforms, Population Aging, and Retirement Decision of the Elderly in a Neoclassical Growth Model," MPRA Paper 102467, University Library of Munich, Germany.
    12. Inagaki, Kazuyuki, 2021. "How are the international capital flows of rapidly aging countries affected by the elderly working longer?," Economic Modelling, Elsevier, vol. 97(C), pages 285-297.
    13. Cipriani, Giam Pietro & Fioroni, Tamara, 2021. "Endogenous Demographic Change, Retirement, And Social Security," Macroeconomic Dynamics, Cambridge University Press, vol. 25(3), pages 609-631, April.
    14. Balteș Nicolae & Jimon Ștefania Amalia, 2018. "Considerations Regarding the Pension Systems in Countries of Central and Eastern Europe," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 94-99, December.
    15. Alberto Bucci & Klaus Prettner, 2020. "Endogenous education and the reversal in the relationship between fertility and economic growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(3), pages 1025-1068, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cipriani, Giam Pietro & Pascucci, Francesco, 2020. "Pension policies in a model with endogenous fertility," Journal of Pension Economics and Finance, Cambridge University Press, vol. 19(1), pages 109-125, January.
    2. Cipriani, Giam Pietro & Fioroni, Tamara, 2021. "Endogenous Demographic Change, Retirement, And Social Security," Macroeconomic Dynamics, Cambridge University Press, vol. 25(3), pages 609-631, April.
    3. Cipriani, Giam Pietro & Fioroni, Tamara, 2023. "Human Capital and Pensions with Endogenous Fertility and Retirement," IZA Discussion Papers 16029, Institute of Labor Economics (IZA).
    4. Peter J. Stauvermann & Ronald R. Kumar, 2016. "Sustainability of A Pay-as-you-Go Pension System in A Small Open Economy with Ageing, Human Capital and Endogenous Fertility," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 2-20, February.
    5. Giam Cipriani, 2014. "Population aging and PAYG pensions in the OLG model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(1), pages 251-256, January.
    6. Cipriani, Giam Pietro & Fioroni, Tamara, 2022. "Social security and endogenous demographic change: child support and retirement policies," Journal of Pension Economics and Finance, Cambridge University Press, vol. 21(3), pages 307-325, July.
    7. Cigno, A., 2016. "Conflict and Cooperation Within the Family, and Between the State and the Family, in the Provision of Old-Age Security," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 609-660, Elsevier.
    8. Ken Tabata, 2015. "Population Aging and Growth: the Effect of PAYG Pension Reform," Discussion Paper Series 125, School of Economics, Kwansei Gakuin University, revised Jan 2015.
    9. Zhao Zhang & Caoyuan Ma & Aiping Wang, 2023. "Environmental Governance, Public Health Expenditure, and Economic Growth: Analysis in an OLG Model," IJERPH, MDPI, vol. 20(4), pages 1-21, February.
    10. Chen, Hung-Ju, 2016. "Fertility, Retirement Age, and PAYG Pensions," MPRA Paper 69819, University Library of Munich, Germany.
    11. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 529-564, April.
    12. Meier, Volker & Wrede, Matthias, 2010. "Pensions, fertility, and education," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(1), pages 75-93, January.
    13. Luciano Fanti & Luca Gori, 2012. "Public Expenditure on Health and Private Old-Age Insurance in an OLG Growth Model with Endogenous Fertility: Chaotic Dynamics Under Perfect Foresight," Computational Economics, Springer;Society for Computational Economics, vol. 40(4), pages 333-353, December.
    14. Robert Fenge & Volker Meier, 2005. "Pensions and fertility incentives," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 28-48, February.
    15. Filoso, Valerio & Papagni, Erasmo, 2015. "Fertility choice and financial development," European Journal of Political Economy, Elsevier, vol. 37(C), pages 160-177.
    16. Gurgen Aslanyan, 2014. "The migration challenge for PAYG," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(4), pages 1023-1038, October.
    17. Siew Ling Yew & Jie Zhang, 2018. "Health spending, savings and fertility in a lifecycle‐dynastic model with longevity externalities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(1), pages 186-215, February.
    18. Yang, Zaigui, 2007. "Partially Funded Pension, Fertility and Endogenous Growth," MPRA Paper 18681, University Library of Munich, Germany.
    19. Miyazaki, Koichi, 2014. "Optimal pay-as-you-go social security when retirement is endogenous and labor productivity depreciates," MPRA Paper 61166, University Library of Munich, Germany.
    20. Vincenzo Galasso & Roberta Gatti & Paola Profeta, 2009. "Investing for the old age: pensions, children and savings," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 538-559, August.

    More about this item

    Keywords

    retirement; aging; PAYG pensions; overlapping generations model;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp9969. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.