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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Sharing high growth across generations: Pensions and demographic transition in China
Organization Unit
  • Zheng Song
  • Kjetil Storesletten
  • Yikai Wang
  • Fabrizio Zilibotti
  • English
Institution University of Zurich : UBS International Center of Economics in Society
Series Name UBS Center Working Paper Series
Number 1
ISSN 2296-2751
Number of Pages 35
Date 2012
Abstract Text Intergenerational inequality and old-age poverty are salient issues in contemporary China. China’s aging population threatens the fiscal sustainability of its pension system, a key vehicle for intergenerational redistribution. We analyze the positive and normative effects of alternative pension reforms, using a dynamic general equi- librium model that incorporates population dynamics and productivity growth. Although a reform is necessary, 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. High wage growth is key for these results.
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Keywords China, Credit market imperfections, Demographic transition, Economic growth, Fully funded system, Inequality, Intergenerational redistribution, Labor supply, Migration, Pensions, Poverty, Rural-urban reallocation, Total fertility rate, Wage growth