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


  • Cipriani, Giam Pietro

    () (University of Verona)


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

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    References listed on IDEAS

    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. 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.
    6. 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.
    7. Mizuno, Masakatsu & Yakita, Akira, 2013. "Elderly labor supply and fertility decisions in aging-population economies," Economics Letters, Elsevier, vol. 121(3), pages 395-399.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. Alders, Peter & Broer, D. Peter, 2005. "Ageing, fertility, and growth," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1075-1095, June.
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    Cited by:

    1. Hirono, Makoto & Mino, Kazuo, 2019. "Pension, Retirement, and Growth in the Presence Heterogeneous Elderly," MPRA Paper 98096, University Library of Munich, Germany.
    2. Hott, Christian, 2019. "Save or Pay-As-You-Go," Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203642, Verein für Socialpolitik / German Economic Association.
    3. Marina Tabatadze, 2019. "Optimal Structure of Pension System and Its Influence on the Social Policy of State Budget," Working papers 03 MT, Research Association for Interdisciplinary Studies.
    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. 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.
    6. Cipriani, Giam Pietro & Fioroni, Tamara, 2019. "Endogenous Demographic Change, Retirement and Social Security," IZA Discussion Papers 12244, Institute of Labor Economics (IZA).

    More about this item


    retirement; aging; PAYG pensions; overlapping generations model;

    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

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