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Old age consumption and pension policy in a two-tier developing economy

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  • PADDISON, Oliver
  • PESTIEAU, Pierre

Abstract

In a number of developing countries, an important part of the economy is informal both in terms of production and of social protection. In this paper we consider introducing a universal pension system in the formal sector. It is shown to have two main effects: first, it makes the formal sector more attractive to migration and second, it affects capital accumulation in a way which depends on the type of social security introduced, PAYG or funded, and its induced effect on private saving.

Suggested Citation

  • PADDISON, Oliver & PESTIEAU, Pierre, 2001. "Old age consumption and pension policy in a two-tier developing economy," LIDAM Discussion Papers CORE 2001045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2001045
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    References listed on IDEAS

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    3. Razin, Assaf & Sadka, Efraim, 1999. "Migration and pension with international capital mobility," Journal of Public Economics, Elsevier, vol. 74(1), pages 141-150, October.
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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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