Pension reform, employment by age, and long-run growth in OECD countries

Tim Buyse, Freddy Heylen and Renaat van de Kerckhove

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: We study the effects of pension reform in a four-period OLG model for an open economy where hours worked by three active generations, education of the young, the retirement decision of older workers, and aggregate per capita growth, are all endogenous. Next to the characteristics of the pension system, our model assigns an important role to the composition of fiscal policy. We find that the model explains the facts remarkably well for many OECD countries. Our simulation results prefer an intelligent pay-as-you-go pension system above a fully-funded private system. When it comes to promoting employment, human capital, growth, and welfare, positive effects in a PAYG system are the strongest when it includes a tight link between individual labor income (and contributions) and the pension, and when it attaches a high weight to labor income earned as an older worker to compute the pension assessment base.

Pages: 39 pages
Date: 2011-05
New Economics Papers: this item is included in nep-age, nep-cmp, nep-dge, nep-lab and nep-lma
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Citations: View citations in EconPapers (2)

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Working Paper: Pension reform, employment by age, and long-run growth in OECD countries (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:11/719

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