Pension Systems (Un)sustainability and Fiscal Constraints: A Comparative Analysis

Burkhard Heer, Vito Polito and Mike Wickens ()
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Mike Wickens: Department of Economics, University of York, CESifo, CEPR, Netspar, Cardiff University

No 2023014, Working Papers from The University of Sheffield, Department of Economics

Abstract: Using an overlapping generations model, two new indicators of public pension system sustainability are proposed: the pension space, which measures the capacity to pay for pension expenditures out of labour taxation, and the pension space exhaustion probability reflecting demographic uncertainties. These measures reveal that the pension spaces of advanced economies are strikingly different. Most nations have little scope to further finance pensions out of labour income taxation over the next thirty years. There is no one-size-fits-all solution. Risk-equivalent pension reforms enhance welfare in the long run, particularly for rapidly ageing nations, but also entail non-negligible transitional costs.

Keywords: Ageing; Fiscal Space; Public Pension Sustainability; Overlapping Generations Model (search for similar items in EconPapers)
JEL-codes: E62 H20 H55 (search for similar items in EconPapers)
Pages: 74 pages
Date: 2023-06
New Economics Papers: this item is included in nep-age, nep-mfd and nep-rmg
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https://www.sheffield.ac.uk/economics/research/serps First version, June 13 2023 (application/pdf)

Related works:
Working Paper: Pension Systems (Un)sustainability and Fiscal Constraints: A Comparative Analysis (2023)
Working Paper: Pension Systems (Un)sustainability and Fiscal Constraints: A Comparative Analysis (2023)
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