Abstract

http://ssrn.com/abstract=2262375
 


 



Sharing High Growth across Generations: Pensions and Demographic Transition in China


Zheng Michael Song


Fudan University - School of Economics

Kjetil Storesletten


University of Oslo - Department of Economics; Centre for Economic Policy Research (CEPR)

Yikai Wang


University of Zurich

Fabrizio Zilibotti


University of Zurich; Centre for Economic Policy Research (CEPR)

November 1, 2012

UBS Center Working Paper Series, Working Paper No. 1, November 2012

Abstract:     
Intergenerational inequality and old-age poverty are salient issues in contemporary China. China’s aging population threatens the fiscal sustainability of its pension system, a key vehicle for intergenerational redistribution. We analyze the positive and normative effects of alternative pension reforms, using a dynamic general equilibrium model that incorporates population dynamics and productivity growth. Although a reform is necessary, delaying its implementation implies large welfare gains for the (poorer) current generations, imposing only small costs on (richer) future generations. In contrast, a fully funded reform harms current generations, with small gains to future generations. High wage growth is key for these results.

Number of Pages in PDF File: 52

Keywords: China, Credit market imperfections, Demographic transition, Economic growth, Fully funded system, Inequality, Intergenerational redistribution, Labor supply, Migration, Pensions, Poverty, Rural-urban reallocation, Total fertility rate, Wage growth

JEL Classification: E21, E24, G23, H55, J11, J13, O43, R23

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Date posted: June 6, 2013  

Suggested Citation

Song, Zheng Michael and Storesletten, Kjetil and Wang, Yikai and Zilibotti, Fabrizio, Sharing High Growth across Generations: Pensions and Demographic Transition in China (November 1, 2012). UBS Center Working Paper Series, Working Paper No. 1, November 2012. Available at SSRN: http://ssrn.com/abstract=2262375 or http://dx.doi.org/10.2139/ssrn.2262375

Contact Information

Zheng Song (Contact Author)
Fudan University - School of Economics ( email )
600 GuoQuan Road
Shanghai, 200433
China
Kjetil Storesletten
University of Oslo - Department of Economics ( email )
P.O. Box 1095 Blindern
N-0317 Oslo
Norway
+47 2284 4009 (Phone)
+47 2285 5035 (Fax)
HOME PAGE: http://folk.uio.no/kjstore/
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Yikai Wang
University of Zurich ( email )
Rämistrasse 71
Zürich, CH-8006
Switzerland
Fabrizio Zilibotti
University of Zurich ( email )
Rämistrasse 71
Zürich, CH-8006
Switzerland
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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