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Urban Public Pension, Replacement Rates and Population Growth Rate in China

Zaigui Yang

MPRA Paper from University Library of Munich, Germany

Abstract: This paper uses an overlapping generations model to investigate the urban public pension in China. It examines the effects of the replacement rates and population growth rate on the capital-labor ratio, pension benefits, consumption and utility, and finds the optimal replacement rate. It is shown that raising the individual account benefit replacement rate only induces the increase in the individual account benefits. Raising the social pool benefit replacement rate induces the increase in the social pool benefits and retirement-period consumption, while the decrease in the capital-labor ratio, individual account benefits, working-period consumption and utility. The fall in the population growth rate leads to the increase in the capital-labor ratio, social pool benefits, individual account benefits, working-period consumption and utility, and leads to a decrease in the retirement-period consumption. The optimal social pool benefit replacement rate depends on the individual discount factor, social discount factor, capital share of income and population growth rate, and it decreases in the case of falling population growth rates. It will do more good than harm to raise the individual account benefit replacement rate, reduce the social pool benefit replacement rate and strictly implement China's population policy.

Keywords: Urban public pension; Replacement rate; Population growth rate (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Date: 2009-10
New Economics Papers: this item is included in nep-age, nep-dge, nep-lab, nep-tra and nep-ure
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Published in Insurance: Mathematics and Economics 2.45(2009): pp. 230-235

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Journal Article: Urban public pension, replacement rates and population growth rate in China (2009) Downloads
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