Economic Research Journal,Part 1: Economic Perspective,Vol 51,No. 01
This paper constructs an overlapping generation model with postponed retirement and endogenous fertility rate, and explores the effect of postponed retirement on fertility rate and economic growth. We find that postponed retirement can increase endogenous fertility rate in both neoclassical growth model and endogenous growth model. There are two channel through which postponed retirement can affect fertility rate. On the one hand, postponed retirement makes the old people have more income, which in turn lowers individuals’ saving and make individuals supply less labor and devote more time in rearing children. On the other hand, postponed retirement lowers capital stock, and individuals have to devote more time in working to maintain consumption level in the young period. In our model, the positive effect of postponed retiremen dominates its negative effect. The impact of postponed retirement on economic growth depends on model specification. In neoclassical growth model, postponed retirement can increase economic growth through its positive effect on fertility rate. In endogenous growth model, positive effect of postponed retirement on economic growth through fertility channel is less than its negative effect through capital accumulation, and postponed retirement lowers economic growth.
Chinese Journal of Population Science,Part 1: Economic Perspective,No. 02
This paper compares the difference between partially funded system and provident fund system from the perspective of deferred retirement incentives, and introduces the pension yield rate as the selection criterion. By using the overlapping generations model (OLG) and actuarial models, the pension system is structured and analyzed. On this basis, life-cycle wealth choice model is used for empirical analysis. The results show that the average retirement age of workers in Suzhou industrial park is nearly two more years senior than that in Suzhou. Theoretical analysis shows that historical contribution of workers will affect retirement behavior. Endogenous incentives are key factors leading to the difference in retirement age between the two systems. Institutional factors, such as wage index and payment months, have different effects on retirement incentives under the two systems. Under the same conditions, the low human capital group is more inclined to early retirement. It is suggestive to take the labor contribution of workers and the policy effect of the individual heterogeneity into consideration. In contrast to delay retirement age, the establishment of institutional endogenous incentive mechanism and the structural adjustment of pension system can be a better option.
Finance & Trade Economics,Part 1: Economic Perspective,Vol 37,No. 03
Against the background of aging, to delay retirement has been on the agenda in China. This paper builds a dynamic CGE model to analyze delayed retirement in China and finds that delay retirement in China has a significant role in promoting economic growth, and the change in the substitution relation between capital and labor can enhance the efficiency of factor utilization in China, improving the level of rationalization of industrial structure. However, because the second industry can gain the most benefits from delayed retirement, it is not conducive to enhancing the level of optimization of industrial structure. From the perspective of comparison among different schemes, a moderate delayed retirement scheme that has a longer time span can produce more smooth effects on economic and smaller negative effects on industrial structure.
Journal of Public Management,Part 1: Economic Perspective,Vol 16,No. 04
The contribution rate of basic pension insurance for urban employees has been reduced by three percentage points. Against the background of deepening aging, this paper aims to study the sustainability of the pension insurance fund and provide policy reference and validation for the government. The actuarial model is used to analyze the sustainability of pension fund under the policy of reducing the contribution rate, reforming the collection system and delaying the retirement age. After reducing the contribution rate by three percentage points, the fund will start to run a cumulative deficit in 2025, with a total deficit of CNY 544.98 trillion in 2065. After the reform of collection system, the time will be delayed by 1–11 years. When the policy of delaying retirement age is further introduced, the time will be delayed by 1–35 years. All the above conclusions have passed the sensitivity test. The actuarial method is used to simulate the impact of various policy reforms on the financial operation of pension insurance fund, so as to provide the government with scheme assumption and parameter support in policy adjustment. Based on the characteristics of the “mixed-up” operation of pooling fund and individual account for pension fund in China, this paper examined the pooling fund and individual accounts comprehensively, and considered the fund income excluding the financial subsidy part, so as to avoid underestimating the financial gap of the fund, and calculate the fund income closer to the actual situation.
Economic Review,Part 1: Economic Perspective,No. 05
This paper investigates the output elasticity of workers at different ages from 15 to 59 years old based on the macroeconomic data of two cross sections in 2000 and 2010, respectively. In 2010, the right end of curve that reflects the productivity of workers of higher ages moves downward greatly compared with that in 2000, especially in the eastern region in China. However, it does moves downward moderately in the central and western regions. Considering that wage can be the proxy variable for labor productivity, this paper also investigates the change of wage-age profile curve over this period by analyzing the microeconomic data provided by CGSS. The research shows that these two curves change synchronously to some extent. These changes are probably caused by changing demand of human resources from the rapid social and economic development, which results in that young workers are increasingly becoming the most productive ones in China recently and this is in sharp contrast to other countries who are delaying the statutory retirement age. To enact reasonable retirement policy, we should consider the unique national context and the continuous change of productivity-age profile curve caused by the shift of economic development pattern.
Public Finance Research,Part 1: Economic Perspective,No. 06
With the accelerating aging population in China, the pressure of Basic Pension Insurance for Urban Employees (BPIUE) fund is also increasing. The annual average growth rate of the government subsidy has reached 21.94%, significantly higher than the fiscal revenue in the same period. Coupled with the normal development of the national economy, the growth rate of fiscal revenue is continuing to slow down. Then the reimbursement mechanism of cost on the transition of BPIUE has not been established, and the fiscal responsibility among governments is also unclear. Whether the fiscal burden will be overwhelmed? Therefore, in order to realize the smooth operation of fund in the short and medium term (2018–2050 and 2018–2065, respectively), this paper constructed an actuarial model to analyze the financial situation of BPIUE fund and fiscal subsidy. We found that the universal two-child policy can improve the sustainability of fund to a certain extent. The higher the willingness of giving birth is, the more obvious the effect is. On this basis, we further simulated the impact of delaying retirement age. The result shows that it can improve the sustainability of fund significantly, regardless of gender differences. Based on this, this paper proposed that we should encourage the birth of two children, delay the retirement age and improve value maintenance and appreciation of the fund.
Population & Economics,Part 1: Economic Perspective,No. 07
Actuarial fair of the public pension system is the economical basis of increasing retirement age. Based on the estimation of Option Value model, male workers and low-income works will face with considerable pension income loss if they postpone the retirement age under current social insurance system. Besides, women could also suffer from the increasing of retirement age under certain circumstances. According to the analysis, the current pension formula should be adjusted in order to facilitate the future retirement reform.
Finance & Trade Economics,Part 1: Economic Perspective,Vol 41,No. 08
This paper examined the impact of life expectancy extension and retirement age rise on economic growth by constructing an overlapping generation model with fiscal expenditure and endogenous fertility rate, and set targets to explore how to adjust the retirement age as life expectancy increases. The study found that life expectancy extension will lead to a decline in fertility rate, output per labor and total output but an increase in the proportion of fiscal pension expenditures, while raising the retirement age will lead to a rise in fertility rate, output per labor and total output but a decline in the proportion of fiscal pension expenditures. It shows that raising the retirement age can offset the negative impact of life expectancy extension. Against the goals of no increase in fiscal pension burden and no reduction in output per labor or total output, the retirement age threshold rises along with life expectancy extension, but the economic effects are quite different, and the fertility rate decreases in all the three cases. The policy implications of this paper are that against the background of life expectancy extension, raising the retirement age is a reasonable and necessary policy option. Establishing an adjustment mechanism linking the retirement age to life expectancy, broadening pension financing channels, and improving maternity supporting policies will help curb the decline in fertility rate, alleviate fiscal pension burden and boost economic growth.
Population & Economics,Part 1: Economic Perspective,No. 09
The financial sustainability of basic pension fund is essential for developing a sustainable basic pension insurance system. Based on the current China’s regulations on revenue and expenditure for urban employees’ basic pension insurance, this paper establishes a stochastic model of the long-term finance for basic pension, and uses Monte Carlo stochastic simulation to calculate the value of variables in the forecast years. The trend of financial condition and possible fluctuation of basic pension fund in the next 75 years are calculated after 5000 times of simulations. The result shows that the annual fee revenue of the basic pension insurance will be inadequate to meet the need for annual pension expenditure by 2020, and there will be a shortage in that year. By 2025, the accumulated pension surplus will be exhausted and there will be accumulated deficit. If the legal retirement age is deferred for five years, the possible occurrence of the deficit for revenue-expenditure balance of the basic pension insurance fund will be postponed by about 17 years, and the accumulated deficit in 2085 will be decreased by about 55%.
