Urban public pension, replacement rates and population growth rate in China

Abstract

This paper uses an overlapping generations model to investigate the urban public pension in China. It examines the effects of the replacement rates and population growth rate on the capital-labor ratio, pension benefits, consumption and utility, and finds the optimal replacement rate. It is shown that raising the individual account benefit replacement rate only increases the individual account benefits. Raising the social pool benefit replacement rate induces the increase in the social pool benefits and retirement-period consumption, while the decrease in the capital-labor ratio, individual account benefits, working-period consumption and utility. The fall in the population growth rate leads to the increase in the capital-labor ratio, social pool benefits, individual account benefits, working-period consumption and utility, while the decrease in the retirement-period consumption. The optimal social pool benefit replacement rate depends on the individual discount factor, social discount factor, capital share of income and population growth rate, and it decreases in the case of fallen population growth rate. It will do more good than harm to raise the individual account benefit replacement rate, reduce the social pool benefit replacement rate and strictly implement China's population policy.

Endogenous health risks, poverty traps, and the roles of health insurance in poverty alleviation

“…Following the assumption of İmrohoroğlu and Zhao (2018), we assume the utility function is a constant relative risk aversion function, and the relative risk-aversion coefficient is set at γ = 3 [ 27 ]. Referring to [ 32 , 49 ], the one-year utility discount factor is set at 0.98 (i.e., β = 0.98 20 ). The extent of the altruistic motivation φ , which measures the extent of parental preference for the lifetime utility of the offspring, is set at 1 in this study.…”

“…α measures the output elasticity of capital. Referring to [ 49 ], this study sets α = 0.35. A measures total factor productivity, commonly used in numerical simulations to regulate wages and interest rates [ 31 ], and is set at A = 20,000 in the paper.…”

Endogenous health risks, poverty traps, and the roles of health insurance in poverty alleviation

“…Following the assumption of İmrohoroğlu and Zhao (2018), we assume the utility function is a constant relative risk aversion function, and the relative risk-aversion coefficient is set at γ = 3 [27]. Referring to [32,49], the one-year utility discount factor is set at 0.98 (i.e., β = 0.98 20 ). The extent of the altruistic motivation φ, which measures the extent of parental preference for the lifetime utility of the offspring, is set at 1 in this study.…”

How private sector participation improves retirement preparation: A case from China

“…James (2002), and Sun and Suo (2007) note that accumulated savings and private insurance solutions should fill the protection gap of the Chinese public pension, which alone is considered insufficient if the aim is to cover all residents. A few models for analysing reform options for the Chinese public pension system are developed, accompanied by simulations based on macroeconomic statistics, for example Yang (2009), Song et al (2015), and Chen and Groenewold (2017). Wang et al (2014b) empirically estimate the (expected) pension fund gap of China in 2013, 2020, and 2050 based on macroeconomic statistics, and highlight the risk of a Chinese fiscal crisis in the long run.…”