Population Aging and Growth: The Effect of Pay-as-You-Go Pension Reform

Ken Tabata

FinanzArchiv: Public Finance Analysis, 2015, vol. 71, issue 3, 385-406

Abstract: This paper examines how pay-as-you-go (PAYG) pension reform from a defined-benefit scheme to a defined-contribution scheme affects economic growth in an overlapping-generations model with endogenous growth. We show that in economies in which the old-age dependency ratio is high and the size of pension benefits under a defined-benefit scheme is large, such a pension reform mitigates the negative growth effect of population aging caused by a decline in the population growth rate or an increase in life expectancy.

Keywords: population aging; PAYG pensions; defined-benefit schemes; defined-contribution schemes (search for similar items in EconPapers)
JEL-codes: D91 H55 O41 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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DOI: 10.1628/001522108X14385891669698

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