Aging, Inadequacy and Fiscal Constraint: The Case of Thailand

Phitawat Poonpolkul, Ponpoje Porapakkarm and Nada Wasi

No 182, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: We use an overlapping generations model to study the challenge in developing countries with a large informal sector and aging populations. We use Thailand as a case study and incorporate its labor market structure and its public pension system into the calibrated model. Unlike developed countries, workers in developing countries commonly transit from the formal sector to the informal sector, which can be in the early stage of their working life. This labor market feature crucially limits the coverage of the contributory social security system. We find that 66% of Thai elderly (aged 60 years old or over) are ineligible for social security annuity benefits because of an insufficient number of years paying into the social security fund. In addition, we use our model to evaluate two schemes to raise the existing universal basic pension income to the poverty line; namely, uniform benefits and pension-tested benefits. We find that pension-testing effectively improves the targeting efficiency, and non-trivially lower the cost of the basic pension income program.

Keywords: Overlapping generations model; Fiscal sustainability; Pension; Social Security; Thailand (search for similar items in EconPapers)
JEL-codes: H55 I38 J1 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2022-06, Revised 2023-03
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-iue and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Aging, inadequacy, and fiscal constraint: The case of Thailand (2024)
Working Paper: Aging, Inadequacy, and Fiscal Constraint: The Case of Thailand (2023)
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