scholarly journals ENDOGENOUS DEMOGRAPHIC CHANGE, RETIREMENT, AND SOCIAL SECURITY

2019 ◽  
pp. 1-23
Author(s):  
Giam Pietro Cipriani ◽  
Tamara Fioroni
Keyword(s):  
Social Security ◽  
Demographic Change ◽  
Pension System ◽  
Negative Impact ◽  
Positive Impact ◽  
Physical Capital ◽  
Mandatory Retirement ◽  
Defined Contribution ◽  
Tax Rate ◽  
Pension Benefits

In this paper, we analyze the effects of demographic change on a pay-as-you-go (PAYG) pension system, financed with a defined contribution scheme. In particular, we examine the relationship between retirement, fertility, and pensions in a three-period overlapping generations model. We focus on both the case of mandatory retirement and the case where the retirement age is freely chosen. In the case of mandatory retirement, increasing longevity has an unambiguously negative impact on fertility and pension payouts and a positive effect on the level of physical capital in the steady state. On the other hand, when agents choose the time of retirement, an increase in life expectancy positively affects physical capital only when the tax rate is sufficiently low and can have a positive impact on pension benefits, because agents may find it optimal to retire later and to decrease fertility less. Finally, the effects of the social security tax on capital per worker are negative with mandatory retirement; however, they could be positive in the optimal retirement case.

scholarly journals Closing the gender gap in pensions: A microsimulation analysis of the Norwegian NDC pension system

2018 ◽  
Vol 29 (1) ◽  
pp. 130-143 ◽  
Author(s):  
Elin Halvorsen ◽  
Axel West Pedersen
Keyword(s):  
Gender Gap ◽  
Economies Of Scale ◽  
Pension System ◽  
Personal Income ◽  
Defined Contribution ◽  
Pension Income ◽  
System A ◽  
Actuarial Fairness ◽  
Annual Earnings ◽  
Pension Benefits

In this article, we use an advanced microsimulation model to study the distributional effects of the reformed Norwegian pension system with a particular focus on gender equality. The reformed Norwegian system is based on the notional defined contribution (NDC)-formula with fixed contribution/accrual rates over the active life-phase and with accumulated pension wealth being transformed into an annuity upon retirement. A number of redistributive components are built into the system: a unisex annuity divisor, a ceiling on annual earnings, generous child credits, a possibility for widows/widowers to inherit pension rights from a deceased spouse, a targeted guarantee pensions with higher benefit rates to single pensioners compared to married/cohabitating pensioners, and finally a tax system that is particularly progressive in its treatment of pensioners and pension income. Taking complete actuarial fairness as the point of departure, we conduct a stepwise analysis to investigate how these different components of the National Insurance pension system impact on the gender gap in pensions and on general (Gini) inequality in the distribution of pension income within a cohort of pensioners. Our analysis concentrates on one birth cohort – individuals born in 1963 – and we study three different outcomes: the distribution of annual pensions early in retirement (at age 70), the distribution of the total sum of pension benefits received over retirement, and the distribution of the average annual pension benefits received over the retirement phase. In addition, we look at three alternative income concepts. These are personal income, equivalised household income, and finally an original income concept developed for this study: personal income adjusted for the economies of scale enjoyed by couple households.

The Dynamic Correlation Between Capital Deepening and Total Factor Productivity in China

2020 ◽  
Vol 24 (4) ◽  
pp. 524-531
Author(s):  
Wuliu Zhang ◽  
Keyword(s):  
Human Capital ◽  
Total Factor Productivity ◽  
Negative Impact ◽  
Positive Impact ◽  
Linear Structure ◽  
Physical Capital ◽  
Influence Coefficient ◽  
Factor Productivity ◽  
Capital Deepening ◽  
The Impact

The impact of capital deepening on total factor productivity (TFP) is a significant and controversial issue. Based on the calculation of relevant indicators, this study adopts a Bayesian time-varying parameter model, Bayesian quantile regression, and adaptive Bayesian quantile models for in-depth statistical analysis. TFP was found to have a complex non-linear structure, and physical and human capital deepening indicators show a significant upward trend. The deepening of physical capital has a negative impact on TFP, while the deepening of human capital has a positive impact. In the capital deepening structure, the level of TFP has been improved and its structure optimized. Primary human and non-production physical capital deepening has no significant effect on TFP, while secondary human capital deepening has some significant effects on TFP. Tertiary and productive human capital deepening of TFP present two different forms of significant effect: the influence coefficient of the former declines in the increasing quantile and the change is larger, while the latter has a stable negative impact. The results of this study provide insights in terms of the improvement of China’s productivity.

scholarly journals Informality and the Challenge of Pension Adequacy

2019 ◽  
Vol 19 (149) ◽  
pp. 1
Author(s):  
Christoph Freudenberg ◽  
Frederik Toscani
Keyword(s):  
Pension System ◽  
Pension Reform ◽  
Positive Impact ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Real Rate ◽  
Labor Market Reform ◽  
The Impact ◽  
Term Labor ◽  
Pension Adequacy

Past reforms have put the Peruvian pension system on a largely fiscally sustainable path, but the system faces important challenges in providing adequate pension levels for a large share of the population. Using administrative microdata at the affiliate level, we project replacement rates in the defined benefit (DB) and defined contribution (DC) pillars over the next 30 years and simulate the impact of various reform scenarios on the average level and distribution of pensions. In the DB pillar, the regressive minimum contribution period should be re-thought, while in the DC pillar a broadening of the contribution base and/or an increase in contribution rates would help increase replacement rates relative to the baseline forecast of 25-33 percent. A higher net real rate of return than assumed in the baseline would also have a significant positive impact. In the medium-term, labor market reform to tackle informality, and a broad pension reform to restructure the system and avoid competition between the DB and DC pillars should be a priority. Given low pension coverage, having a strong non-contributory pillar will remain important for the foreseeable future.

scholarly journals The transition to NDC in Italy: assessing distributive and financial effects

2021 ◽  
pp. 1-16
Author(s):  
Carlo Mazzaferro
Keyword(s):  
Net Present Value ◽  
Pension System ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Ratio Distribution ◽  
Actuarial Fairness ◽  
Notional Defined Contribution ◽  
High Level ◽  
Pension Benefits

Abstract Moving from a Defined Benefit (DB) to a Notional Defined Contribution (NDC) pension formula creates significant re-distributive effects. We estimate the amount and the intensity of these effects in the case of the Italian transition to NDC, which began in 1995. Based on administrative data of the main Italian pension scheme (FPLD), we study the evolution of yearly inequality within old-age pension benefits. Furthermore, we study the adequacy and the actuarial fairness of the pension system, by estimating the replacement rates and the Net Present Value Ratio distribution for workers who retired in the period 1996–2019. Our results show that the very generous interpretation of acquired rights determined by the 1995 reform has contributed to maintaining a high level of adequacy and a significant level of intergenerational imbalance. The financial costs of this imbalance are estimated and its extent is significant.

scholarly journals A dynamic analysis of the effect of social security reform on Spanish widow pensioners

2011 ◽  
Vol 58 (5) ◽  
pp. 759-771 ◽  
Author(s):  
Patricia Peinado ◽  
Felipe Serrano
Keyword(s):  
Social Security ◽  
Dynamic Analysis ◽  
Pension System ◽  
Positive Impact ◽  
Duration Analysis ◽  
Vulnerable Groups ◽  
Combined Effects ◽  
Dynamic Effects ◽  
Financial Situation ◽  
Over Time

This paper shows the dynamic effects of the reform of the Spanish social security pension system on the pensions received by one of the most vulnerable groups of the population, namely, widows. We undertake a duration analysis to account for the effects of reform over time. We study the effects on the widows? overall financial welfare in terms of the evolution of their risk of poverty. We show that the combined effects of the measures to be implemented will have a positive impact; that is to say, the risk of poverty diminishes with respect to the current financial situation of the widows. However, the risk of poverty increases as the pensioners get older.

scholarly journals Mismeasurement of pensions before and after retirement: the mystery of the disappearing pensions with implications for the importance of Social Security as a source of retirement support

2013 ◽  
Vol 13 (1) ◽  
pp. 1-26 ◽  
Author(s):  
ALAN L. GUSTMAN ◽  
THOMAS L. STEINMEIER ◽  
NAHID TABATABAI
Keyword(s):  
Social Security ◽  
Pension Plans ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Bottom Line ◽  
Pension Income ◽  
Before And After ◽  
Social Security Wealth ◽  
Pension Benefits ◽  
Pension Wealth

AbstractA review of the literature suggests that when pension values are measured by the wealth equivalent of promised defined benefit pension benefits and defined contribution balances for those approaching retirement, pensions account for more support in retirement than is suggested when their contribution is measured by incomes received directly from pension plans by those who have already retired. Estimates from the Health and Retirement Study for respondents in their early fifties suggest that pension wealth is about 82% as valuable as Social Security wealth. In data from the Current Population Survey (CPS), for members of the same cohort, measured when they are 65–69, pension incomes are about 58% as valuable as incomes from Social Security. Our empirical analysis uses data from the HRS to examine the reasons for these differences in the contributions of pensions as measured in income and wealth data. Key factors accounting for these differences include: a difference in methodology between surveys affecting what is included in pension income; some pension wealth ‘disappears’ at retirement because respondents change their pension into other forms that are not counted as pension income; and the form of annuitization may influence the measure of pension income. A series of caveats notwithstanding, the bottom line is that CPS data on pension incomes received in retirement understates the full contribution pensions make to supporting retirees.

TWO COMPUTATIONS TO FUND SOCIAL SECURITY

1997 ◽  
Vol 1 (1) ◽  
pp. 7-44 ◽  
Author(s):  
HE HUANG ◽  
SELAHATTIN İMROHOROGˇLU ◽  
THOMAS J. SARGENT
Keyword(s):  
Social Security ◽  
Income Tax ◽  
Physical Capital ◽  
Labor Income ◽  
Income Volatility ◽  
Public Provision ◽  
Tax Rate ◽  
Output Ratio ◽  
The Government ◽  
The Impact

We use a general equilibrium model to study the impact of fully funding social security on the distribution of consumption across cohorts and over time. In an initial stationary equilibrium with an unfunded social security system, the capital/output ratio, debt/output ratio, and rate of return to capital are 3.2, 0.6, and 6.8%, respectively. In our first experiment, we suddenly terminate social security payments but compensate entitled generations by a massive one-time increase in government debt. Eventually, the aggregate physical capital stock rises by 40%, the return on capital falls to 4.4%, and the labor income tax rate falls from 33.9 to 14%. We estimate the size of the entitlement debt to be 2.7 times real GDP, which is paid off by levying a 38% labor income tax rate during the first 40 years of the transition. In our second experiment, we leave social security benefits untouched but force the government temporarily to increase the tax on labor income so as gradually to accumulate private physical capital, from the proceeds of which it eventually finances social security payments. This particular government-run funding scheme delivers larger efficiency gains (in both the exogenous and endogenous price cases) than privatization, an outcome stemming from the scheme's public provision of insurance both against life-span risk and labor income volatility.

scholarly journals Economic Effects of Pension Reform based on Consumption Tax

2021 ◽  
Vol 1 (1) ◽  
Author(s):  
Kei Murata
Keyword(s):  
Open Economy ◽  
Capital Accumulation ◽  
Pension System ◽  
Pension Reform ◽  
Physical Capital ◽  
Public Pension ◽  
Consumption Tax ◽  
Tax Rate ◽  
Macroeconomic Effects ◽  
Physical Capital Accumulation

This paper analyzes the micro and macroeconomic effects of pension reform by a consumption tax hike by using an overlapping-generations model that is primarily based on Groezen, Leers and Mejidam (2003). Although Groezen, Leers and Mejidam (2003) consider pay-as-you-go pension in a model of a small open economy, they do not analyze physical capital accumulation, assume that public pension is financed only by the intergenerational transfer of national pension premiums, and ignore consumption tax as a public pension resource. This study considers pay-as-you-go pension in a closed economy model and assumes that public pensions are financed by both consumption taxes and national pension premiums. In addition, although Groezen, Leers and Mejidam (2003) consider a model with endogenous fertility, this analysis uses a model with exogenous fertility based on Verbon (1988) and Breyer (1989). Subsequently, we consider the micro and macroeconomic effects of the policy that increases the consumption tax rate compared to the effects of increases under a national pension system. We find that even if the population growth rate is negative, both a consumption tax hike and increases in people’s national pension premiums surprisingly promote physical capital accumulation, and if promoting physical capital is enough, such policies enhance economic growth remarkably. Furthermore, we show that a consumption tax hike may promote physical capital accumulation compared to an increase in national pension premiums if the consumption tax rate is not too high.

scholarly journals AN EMPIRICAL INVESTIGATION OF THE IMPACTS OF CARBON TAX ON ECONOMIC GROWTH IN NIGERIA

2015 ◽  
pp. 114-131
Author(s):  
Alhassan Mohammed ◽  
Aminu Aminu
Keyword(s):  
Economic Growth ◽  
Carbon Emission ◽  
Carbon Tax ◽  
Negative Impact ◽  
Positive Impact ◽  
Strict Adherence ◽  
Tax Rate ◽  
Long Run ◽  
Causality Tests ◽  
Bound Test

This study is designed to investigate the anticipated impact of carbon tax on economic growth in Nigeria using the scenario of the proposed tax rate on the primary carbon emission-related activities. This study therefore employed ARDL bound test and Toda-Yamamoto causality tests to show the existence of long-run relationship between carbon tax and economic growth. The study therefore revealed that: carbon tax has positive impact on economic growth; governance has negative impact on economic growth: non-existence of causal relationship between carbon tax and economic growth in Nigeria. Hence, the study recommended among others, upward review of carbon tax and strict adherence to the regulation of tax rate on carbon emission be enforced, as well as consideration for application of tax rate on other non-primary emitters of carbon in Nigeria.

scholarly journals Intragenerational redistribution in a funded pension system

2018 ◽  
Vol 18 (2) ◽  
pp. 271-303
Author(s):  
BENEDETTA FRASSI ◽  
GIORGIO GNECCO ◽  
FABIO PAMMOLLI ◽  
XUE WEN
Keyword(s):  
Low Income ◽  
Capital Accumulation ◽  
Labour Supply ◽  
Pension System ◽  
Physical Capital ◽  
Defined Contribution ◽  
Social Security Systems ◽  
Security Systems ◽  
Intergenerational Redistribution ◽  
Physical Capital Accumulation

AbstractIn a general equilibrium framework, this paper studies the properties, in terms of labour market distortions and capital accumulation, of three social security systems: a pay-as-you-go notional defined contribution (PAYG NDC), a fully funded (FF), and a novel modified FF (MFF) system, which includes an intragenerational redistributive component to guarantee minimum living standards to future low-income retirees. We show that while PAYG NDC depresses labour supply and physical capital accumulation, FF is neutral on both dimensions. Conversely, MFF slightly increases physical capital accumulation, without significantly reducing labour supply incentives. Moreover, it reduces the burden of future intergenerational redistribution, and increases social welfare.

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