How Sustainable Are Old-age Pensions in a Shrinking Population with Endogenous Labour Supply?

Pedro Cardoso and Bernard van Praag

No 861, CESifo Working Paper Series from CESifo

Abstract: In this paper we model an OLG-economy where labour supply is endogenously determined and where we assume that there are two pension systems, namely, a pay-as-you-go system and a funded system. The main question is whether there is an equilibrium involving an old-age pensions system, partly financed by PAYG and partly by a capital reserve system, and what will be the size and the composition of the pension income. We also look at the consequences of increasing preference for leisure on the design of the pension system. We assume the population growth rate and the technological growth rate to be endogenous; they are assumed to be correlated with the labour supply. Negative population growth is admitted for by the model. The main conclusion is that there is in any economy an equilibrium, but that the numerical outcomes heavily depend on the attitude towards leisure and the capital production elasticity

Keywords: ageing; labour supply; old-age pensions; pay-as-you-go (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-lab and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_861

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