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Pension reform, fiscal impact, and savings

Related Document
Frame of Image rns: financial strain, disincentive labor supply, longevity • For example,
– – – – Japan changed the eligibility age from 60 to 65 US increased it until it reaches 67 for people born after 1959 Italy increased it from 60 to 65 New Zealand is opposite
• Several other options
– – – – Change in the replacement rate (multiplier) (Japan) Change in the replacement rate (Ireland) Change in early retirement age (Costa Rica) Introducing DC (Chile, Switzerland, Argentina)
3
An An Economic Lifecycle
600
Labor Income
Per Capita Consumption and Labor Income
500 400 300 200 100 0 0 20 Defic it Surplus
Reallocations from surplus to deficit ages required.
C onsumpti on
Defic it
Large deficits at young and old ages.
40 Age 60 80
4
Reallocation system and 2nd demographic dividend
• Social security system affect savings
– Bloom, Canning et al (2007) – Zhang and Zhang (2004)
• Second demographic dividend
– Mason and Lee (2007) – Pension wealth is either the form of assets or transfer wealth. – Low reliance on transfer wealth might lead the economy to high aggregate savings. – Population aging can lead to an accumulation of wealth to meet pension needs for retirement.
Innovation
t ( R) =
Tp ( R ) Tp ( R ) + A( R ) Tp¢ ( R ) A( R ) - Tp ( R ) A¢( R ) [Tp ( R ) + A( R )]2
where R is reform
t ¢( R) =
T p¢ A ' t¢ = (1 - t )( -) t Tp A
Prediction
t ( R) =
Tp ( R ) Tp ( R ) + A( R )
T p¢ A ' t¢ = (1 - t )( - ) t Tp A
• Reduction in pension benefits per se decreases t . • Delay in retirement increases t


Full Text
Title Pension reform, fiscal impact, and savings
Similar Titles
Material Type Proceedings
Author(English)

Lee, Sang-Hyop

Author(Korean)

이상협

Publisher

[Hawaii]:East-West Center

Date 2013-08
Pages 33
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Social Development < Social Welfare
Holding KDI; KDI School