Macroeconomic and Distributional Impacts of French Pension Reforms

Impact macroéconomique et distributif des réformes françaises des retraites

Jhon Jair Gonzalez-Pulgarin () and Francois Langot
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Jhon Jair Gonzalez-Pulgarin: CEPREMAP - Centre pour la recherche économique et ses applications - ECO ENS-PSL - Département d'économie de l'ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres
Authors registered in the RePEc Author Service: Jhon Jair Gonzalez Pulgarin

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Abstract: The projected five-year increase in life expectancy poses significant challenges to macroeconomic equilibrium, as well as to the financial sustainability and distributional fairness of the French pension system. This paper evaluates the macroeconomic and distributional impacts — both in the medium and long run — of reforms aimed at ensuring the system's sustainability. Calibrated on French data, our model shows that extending working life by 3.3 years, as required to restore the system's financial balance, would increase GDP by 11.7% between 2025 and 2075. This contrasts with a 4% increase in GDP under a scenario involving a 13 percentage point reduction in pension benefits, and with stagnation in the case of a 9 percentage point increase in the contribution rate. Both the postponement of the retirement age and the reduction in pension benefits contribute to a rise in wealth inequality, as a growing share of income is derived from financial assets. The welfare analysis shows that extending the working life is the preferred adjustment scenario.

Keywords: Pensions reform heterogeneous agents wealth inequality; Pensions reform; heterogeneous agents; wealth inequality (search for similar items in EconPapers)
Date: 2025-04-25
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