Modeling a Pension System Reform: A Replication Study Comparing the Effects of a Fully Funded Reform in Germany and France
(2022) NEKN01 20221Department of Economics
- Abstract
- In this paper, we replicate a study by de la Croix et al. (2013) to analyze the effects of population aging in Germany when implementing two different counterfactual pension systems. De la Croix et al. (2013) use a dynamic overlapping generations model to simulate population aging and its effects on the French economy. Calibrating and analyzing the same model as in de la Croix et al. (2013) with new data for Germany allows us to compare results over two countries and draw conclusions on the fiscal sustainability of current pension systems in the face of demographic change. The results suggest similar patterns for households’, firms’, and governments’ behavior in Germany and France. According to theory, population aging leads to a decrease... (More)
- In this paper, we replicate a study by de la Croix et al. (2013) to analyze the effects of population aging in Germany when implementing two different counterfactual pension systems. De la Croix et al. (2013) use a dynamic overlapping generations model to simulate population aging and its effects on the French economy. Calibrating and analyzing the same model as in de la Croix et al. (2013) with new data for Germany allows us to compare results over two countries and draw conclusions on the fiscal sustainability of current pension systems in the face of demographic change. The results suggest similar patterns for households’, firms’, and governments’ behavior in Germany and France. According to theory, population aging leads to a decrease in labor supply and a relative capital surplus, resulting in a shift in factor prices. The results show that activity rates for elderly workers increase while savings per capita decrease. Total savings decrease in Germany while they are increasing in France, in line with a decline in population in Germany. New migration data for Germany does neither counteract the increase in Germany’s old-age dependency ratio nor the overall decrease of the German population. Shifting from a pay-as-you-go (PAYG) to a fully funded pension system causes a drop in public pension costs, positively affecting the fiscal sustainability of the system. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9083821
- author
- Neubauer, Linda Jasmin LU and Tchibalina, Elizaveta
- supervisor
- organization
- course
- NEKN01 20221
- year
- 2022
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Pension System, PAYG, Fully Funded, Population Aging
- language
- English
- id
- 9083821
- date added to LUP
- 2022-10-10 09:23:55
- date last changed
- 2022-10-10 09:23:55
@misc{9083821, abstract = {{In this paper, we replicate a study by de la Croix et al. (2013) to analyze the effects of population aging in Germany when implementing two different counterfactual pension systems. De la Croix et al. (2013) use a dynamic overlapping generations model to simulate population aging and its effects on the French economy. Calibrating and analyzing the same model as in de la Croix et al. (2013) with new data for Germany allows us to compare results over two countries and draw conclusions on the fiscal sustainability of current pension systems in the face of demographic change. The results suggest similar patterns for households’, firms’, and governments’ behavior in Germany and France. According to theory, population aging leads to a decrease in labor supply and a relative capital surplus, resulting in a shift in factor prices. The results show that activity rates for elderly workers increase while savings per capita decrease. Total savings decrease in Germany while they are increasing in France, in line with a decline in population in Germany. New migration data for Germany does neither counteract the increase in Germany’s old-age dependency ratio nor the overall decrease of the German population. Shifting from a pay-as-you-go (PAYG) to a fully funded pension system causes a drop in public pension costs, positively affecting the fiscal sustainability of the system.}}, author = {{Neubauer, Linda Jasmin and Tchibalina, Elizaveta}}, language = {{eng}}, note = {{Student Paper}}, title = {{Modeling a Pension System Reform: A Replication Study Comparing the Effects of a Fully Funded Reform in Germany and France}}, year = {{2022}}, }