Effects of Pay-As-You-Go Pension on Macroeconomy

2014 Fiscal Year Final Research Report

• Project/Area Number: 24530349
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Public finance/Monetary economics
• Research Institution: Kobe City University of Foreign Studies (2014); Fukuyama University (2013); Kobe University (2012)
• Principal Investigator: FUJII Takao 神戸市外国語大学, 外国語学部, 准教授 (80547216)
• Co-Investigator(Kenkyū-buntansha): IRITANI Jun 福山大学, 経済学部, 教授 (30107106)
• Project Period (FY): 2012-04-01 – 2015-03-31
• Keywords: 賦課方式年金 / 世代内公平性

Outline of Final Research Achievements

We have studied the effects of pay-as-you-go pension system on capital accumulation, welfare and income inequality under a two-period overlapping generations model with heterogeneous agents. According to conventional wisdom, an increase in PAYGO pension size will crowd out capital if an economy is dynamically efficient, which imply the decrease in social welfare. Our research, however, obtained exactly the opposite results. We examine a pay-as-you-go policy in an economy containing heterogenous households--an increase in constant contribution financed by a decrease in contribution rate proportional to income. We can show that the policy crowds in capital and increases welfare. Moreover, we obtained a necessary and sufficient condition under which the policy will decrease the inequality in life income distribution.

Free Research Field

マクロ経済、財政政策