Sharing high growth across generations: Pensions and demographic transition in China

Zheng Song, Kjetil Storesletten, Yikai Wang, Fabrizio Zilibotti

Research output: Contribution to journalArticlepeer-review

Abstract

We analyze intergenerational redistribution in emerging economies with the aid of an overlapping generations model with endogenous labor supply. Growth is initially high but declines over time. A version of the model calibrated to China is used to analyze the welfare effects of alternative pension reforms. Although a reform of the current system is necessary to achieve financial sustainability, delaying its implementation implies large welfare gains for the (poorer) current generations, imposing only small costs on (richer) future generations. In contrast, a fully funded reform harms current generations, with small gains to future generations. (JEL E13, H55, J11, O11, O15, P24, P36).

Original languageEnglish (US)
Pages (from-to)1-39
Number of pages39
JournalAmerican Economic Journal: Macroeconomics
Volume7
Issue number2
DOIs
StatePublished - 2015
Externally publishedYes

Fingerprint

Dive into the research topics of 'Sharing high growth across generations: Pensions and demographic transition in China'. Together they form a unique fingerprint.

Cite this