Longevity, Grandparents Caring, and PAYG Pensions

Wei Gao (), Chengliang Yan () and Fuyang Zhao ()
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Wei Gao: School of Economics, Central University of Finance and Economics
Chengliang Yan: School of Economics, Central University of Finance and Economics
Fuyang Zhao: School of Economics, Central University of Finance and Economics

Annals of Economics and Finance, 2021, vol. 22, issue 2, 451-465

Abstract: This paper presents an OLG model with endogenous grandparents caring. We show that the increase of longevity has positive effects on grandparents caring, which in turn increases adults' labor supply, and reinforces the positive effect of longevity on pension benefits. Contrary to existing literature, we find that under plausible parameter values, increasing longevity may improve pension benefits. This indicates that population aging driven by increasing longevity may not be a threat to the sustainability of the PAYG pension system.

Keywords: Increasing Longevity; Grandparents Caring; Pensions; Overlapping Generations Model (search for similar items in EconPapers)
JEL-codes: D91 H55 J26 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2021:v:22:i:2:gaoyanzhao

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