IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/2869.html
   My bibliography  Save this paper

Giving the ageing of the population how can countries afford pay-as-you-go social insurance pensions?

Author

Listed:
  • Gugushvili, Alexi

Abstract

The paper examines formation and sustainability of Pay-As-You-Go pension systems within the consequences of the ageing of population. Parametric reforms rather than institutional transformation of Pay-As-You-Go systems into funded pension schemes are advocated. Following the modern theories of family economics and contrary to the mainstream works on the issue, reciprocal causation between pension systems and ageing is stressed. The paper concludes that the World Bank’s first pillar adjustment for maintaining the Pay-As-You-Go schemes achieves its objectives only if it is focused on all elements of the Pay-As-You-Go system.

Suggested Citation

  • Gugushvili, Alexi, 2007. "Giving the ageing of the population how can countries afford pay-as-you-go social insurance pensions?," MPRA Paper 2869, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2869
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/2869/1/MPRA_paper_2869.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michele Boldrin & Sergi Jimenez-Martin, 2007. "Evaluating Spanish Pension Expenditure under Alternative Reform Scenarios," NBER Chapters, in: Social Security Programs and Retirement around the World: Fiscal Implications of Reform, pages 351-412, National Bureau of Economic Research, Inc.
    2. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66(6), pages 467-467.
    3. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1335-1357, July.
    4. Sheetal K. Chand & Mr. Albert Jaeger, 1996. "Aging Populations and Public Pension Schemes," IMF Occasional Papers 1996/013, International Monetary Fund.
    5. Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2006. "Pensions with endogenous and stochastic fertility," Journal of Public Economics, Elsevier, vol. 90(12), pages 2303-2321, December.
    6. Pemberton, James, 2000. "National and international privatisation of pensions," European Economic Review, Elsevier, vol. 44(10), pages 1873-1896, December.
    7. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-337, May.
    8. Giorgio Bellettini & Carlotta Berti Ceroni, 1999. "Is Social Security Really Bad for Growth?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 796-819, October.
    9. Leers, Theo & Meijdam, Lex & Verbon, Harrie A. A., 2004. "Ageing, migration and endogenous public pensions," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 131-159, January.
    10. Bettendorf, Leon J.H. & Heijdra, Ben J., 2006. "Population ageing and pension reform in a small open economy with non-traded goods," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2389-2424, December.
    11. Tanzi,Vito & Schuknecht,Ludger, 2000. "Public Spending in the 20th Century," Cambridge Books, Cambridge University Press, number 9780521662918, January.
    12. Rosati, Furio Camillo, 1996. "Social security in a non-altruistic model with uncertainty and endogenous fertility," Journal of Public Economics, Elsevier, vol. 60(2), pages 283-294, May.
    13. Philipp C. Rother & Marco Catenaro & Gerhard Schwab, 2004. "Aging and Pensions in the Euro Area," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(4), pages 593-593, December.
    14. Fertig, Michael & Schmidt, Christoph M. & Schneider, Hilmar, 2006. "Active labor market policy in Germany--Is there a successful policy strategy?," Regional Science and Urban Economics, Elsevier, vol. 36(3), pages 399-430, May.
    15. MARCHAND, Maurice & PESTIEAU, Pierre, 1991. "Public pensions: choices for the future," LIDAM Reprints CORE 938, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    16. Nicholas Barr & Peter Diamond, 2006. "The Economics of Pensions," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(1), pages 15-39, Spring.
    17. Sayan, Serdar & Kiraci, Arzdar, 2001. "Parametric pension reform with higher retirement ages: A computational investigation of alternatives for a pay-as-you-go-based pension system," Journal of Economic Dynamics and Control, Elsevier, vol. 25(6-7), pages 951-966, June.
    18. Mr. Alfredo Cuevas & Mr. George A Mackenzie & Mr. Philip R. Gerson, 1997. "Pension Regimes and Saving," IMF Occasional Papers 1997/006, International Monetary Fund.
    19. World Bank, 2005. "World Development Indicators 2005," World Bank Publications - Books, The World Bank Group, number 12425.
    20. Gilles Saint-Paul, 1992. "Fiscal Policy in an Endogenous Growth Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1243-1259.
    21. Brunner, Johann K., 1996. "Transition from a pay-as-you-go to a fully funded pension system: The case of differing individuals and intragenerational fairness," Journal of Public Economics, Elsevier, vol. 60(1), pages 131-146, April.
    22. Razin, Assaf & Sadka, Efraim, 1999. "Migration and pension with international capital mobility," Journal of Public Economics, Elsevier, vol. 74(1), pages 141-150, October.
    23. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    24. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
    25. Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
    26. Marco Pagano & Paolo Volpin, 2001. "The Political Economy of Finance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 17(4), pages 502-519.
    27. Galasso, Vincenzo & Profeta, Paola, 2007. "How does ageing affect the welfare state?," European Journal of Political Economy, Elsevier, vol. 23(2), pages 554-563, June.
    28. Isaac Ehrlich & Jinyoung Kim, 2007. "Social Security and Demographic Trends: Theory and Evidence from the International Experience," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(1), pages 55-77, January.
    29. Maddison, Angus, 1987. "Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 649-698, June.
    30. World Bank, 2005. "World Development Indicators 2005," World Bank Publications - Books, The World Bank Group, number 12426.
    31. Marchand, M. & Pestieau, P., 1991. "Public pensions: Choices for the future," European Economic Review, Elsevier, vol. 35(2-3), pages 441-453, April.
    32. Auerbach,Alan J. & Lee,Ronald D. (ed.), 2001. "Demographic Change and Fiscal Policy," Cambridge Books, Cambridge University Press, number 9780521662444, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    2. Peter J. Stauvermann & Ronald R. Kumar, 2016. "Sustainability of A Pay-as-you-Go Pension System in A Small Open Economy with Ageing, Human Capital and Endogenous Fertility," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 2-20, February.
    3. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    4. Vincenzo Galasso & Roberta Gatti & Paola Profeta, 2009. "Investing for the old age: pensions, children and savings," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 538-559, August.
    5. Simon Fan & Yu Pang & Pierre Pestieau, 2022. "Investment in children, social security, and intragenerational risk sharing," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(2), pages 286-315, April.
    6. Giancarlo Marini & Pasquale Scaramozzino, 2003. "Intergenerational Transfers and Growth," Palgrave Macmillan Books, in: Luigi Paganetto & Edmund S. Phelps (ed.), Finance, Research, Education and Growth, chapter 3, pages 38-48, Palgrave Macmillan.
    7. Axel Börsch-Supan & Alexander Ludwig, 2010. "Old Europe Ages: Reforms and Reform Backlashes," NBER Chapters, in: Demography and the Economy, pages 169-204, National Bureau of Economic Research, Inc.
    8. Belan, Pascal & Pestieau, Pierre, 1999. "Privatisation des systèmes de retraite : une évaluation critique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 9-27, mars-juin.
    9. Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie‐Ange VÉGANZONÈS‐VAROUDAKIS, 2007. "Governance Institutions And Private Investment: An Application To The Middle East And North Africa," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 339-377, September.
    10. G Cameron, 1996. "Innovation and Economic Growth," CEP Discussion Papers dp0277, Centre for Economic Performance, LSE.
    11. Daren, Conrad, 2007. "Education and Economic Growth: Is There a Link?," MPRA Paper 18176, University Library of Munich, Germany, revised 2009.
    12. Andersen, Torben M. & Bhattacharya, Joydeep & Gestsson, Marias H., 2021. "Pareto-improving transition to fully funded pensions under myopia," Journal of Demographic Economics, Cambridge University Press, vol. 87(2), pages 169-212, June.
    13. Klaus Schmidt-Hebbel, 2006. "Chile's Economic Growth," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 5-48.
    14. Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2011. "Fertility, human capital accumulation, and the pension system," Journal of Public Economics, Elsevier, vol. 95(11), pages 1272-1279.
    15. Puliafito, Salvador Enrique & Puliafito, José Luis & Grand, Mariana Conte, 2008. "Modeling population dynamics and economic growth as competing species: An application to CO2 global emissions," Ecological Economics, Elsevier, vol. 65(3), pages 602-615, April.
    16. Helmuth Cremer & Firouz Gahvari & Pierre Pestieau, 2008. "Pensions with heterogenous individuals and endogenous fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(4), pages 961-981, October.
    17. Firouz Gahvari, 2009. "Pensions and fertility: in search of a link," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 418-442, August.
    18. Yvonne Adema & Lex Meijdam & Harrie Verbon, 2009. "The international spillover effects of pension reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(5), pages 670-696, October.
    19. Richard C. Barnett & Joydeep Bhattacharya & Mikko Puhakka, 2018. "Private versus public old-age security," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(3), pages 703-746, July.
    20. André A. Hofman, 2000. "The Economic Development of Latin America in the Twentieth Century," Books, Edward Elgar Publishing, number 1534.

    More about this item

    Keywords

    Pensions; Pay-As-You-Go; Ageing;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:2869. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.