Pension Reform in Taiwan: the Path to Long-Run Sustainability

Yu-Hsiang Cheng (), Hsuan-Chih Lin and Atsuko Tanaka
Additional contact information
Yu-Hsiang Cheng: Public Utilities Section, Department of Public Works, Keelung City Government

No 17-A008, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: This paper quantifies the fiscal costs of different pension reforms in Taiwan that achieve long-run sustainability. We build a general equilibrium life-cycle model with endogenous labor supply in both intensive and extensive margins, consumption, saving, and benefit claiming. Several options to make pensions sustainable under current demographic changes are presented; increase income tax by 5.4 percent, increase the consumption tax by 6.2 percent, increase the pension tax by 9 percent, or reduce the pension benefits by 23.5 percent. Furthermore, we evaluate the changes in macroeconomic indicators as well as labor market outcomes under different reforms. Last, we highlight the importance of the general equilibrium effects that can account for endogenously saving and labor supply, as partial equilibrium analysis usually underestimates negative effects.

Keywords: Pension Reform; Long-Run Sustainability; Intensive and Extensive Margins JEL Classification: E2; E6; H5; J2 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2017-06
New Economics Papers: this item is included in nep-age, nep-dge and nep-pbe
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econ.sinica.edu.tw/~econ/pdfPaper/17-A008.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sin:wpaper:17-a008

Access Statistics for this paper

More papers in IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan Contact information at EDIRC.
Bibliographic data for series maintained by HsiaoyunLiu ().