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Title: Pay-as-you-go pension systems supported by the old rich
Authors: Tanigawa, Kotono
Sakagami, Tomoya
Keywords: pay-as-you-go pension system
intergenerational inequity
overlapping generations model
Issue Date: Sep-2021
Publisher: Institute of Economic Research, Kyoto University
Journal title: KIER Discussion Paper
Volume: 1067
Start page: 1
End page: 17
Abstract: In this paper, we present a pension policy that supplements the pay-as-you-go pension system with payments by old generations with a high assets income. This supplement is intended to reduce intergenerational inequity. To analyze the effect of this pension policy on both capital stock in the economy and the utilities of the rich and the poor, we build an Over-Lapping Generations model with different incomes when young. This model finds that the stable steady-state capital stock level increases as the old rich generation contributes to the pension system. We also find by numerical simulations that there is a Pareto efficient premium level between high-income and low-income people.
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Appears in Collections:KIER Discussion Paper (English)

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