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Population Aging And Public Pension: The Case Of Beijing Analyzed By An Olg Model

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  • ZAIGUI YANG

    (School of Insurance and China Institute for Actuarial Science, Central University of Finance and Economics, 39 South College Road, Haidian District, Beijing 100081, P. R. China)

Abstract

This paper employs an overlapping-generations (OLG) model with altruistic motive and lifetime uncertainty to investigate the urban public pension system in China. Focusing on the case of Beijing, we examine the effects of the individual contribution rate, firm contribution rate, life expectancy and population growth rate on the capital-labor ratio, savings, per capita consumption and pension benefits. By controlling the firm contribution rate to adjust the capital-labor ratio of the market economy to the modified golden rule level, we find the optimal firm contribution rate. We also discuss the optimal firm contribution rate in Beijing under three cases: risen life expectancy, fallen population growth rate and the joint case of risen life expectancy and fallen population growth rate, and estimate the optimal firm contribution rate in 2020s. Integrating the established effects and the current economic goals, it is concluded that it will do more good than harm to strictly implement Beijing municipal population policy, improve the living and medical conditions, reduce the firm contribution rate, and raise the individual contribution rate.

Suggested Citation

  • Zaigui Yang, 2016. "Population Aging And Public Pension: The Case Of Beijing Analyzed By An Olg Model," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-14, September.
    • Handle: RePEc:wsi:serxxx:v:61:y:2016:i:04:n:s0217590815500459
    DOI: 10.1142/S0217590815500459
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    Cited by:

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