Viability of pay-as-you-go systems

Abstract

When the dependency ratio inactive/active increases to intolerable proportions, the question arises as to how and when pay-as-you-go social security systems can be controlled so as to safeguard a decent way of life to everyone. Between uncertainty linked to wages and the interest rate, and room to manoeuvre the age of retirement and the immediate transfer from workers to pensioners, not just any route permits this objective. The set of those which do is here delineated (the viability kernel tube), and the operations at any time necessary to control trajectories so as they remain in this set are identified (the regulation map). Finally, the flexibility necessary to avoid failure, from any state reached by the pay-as-you-go system, is inferred in timing and magnitude.

Can Technological Change Sustain Retirement in an Aging Population?

“…. introducing other key variables such as gains in productivity, would improve the model'' (Aubin et al, 2001). Our results presented below indicate a possible extent of this improvement.…”

“…The current demographic situation in the developed world has initiated significant public and scientific interest among economists (Fair and Dominguez, 1991;Kelley and Schmidt, 1995;Galor and Weil, 2000;Kalemli-Ozcan et al, 2000;Aubin et al, 2001;Futagami and Nakajima, 2001;Poterba, 2001;Boucekkine et al, 2002Boucekkine et al, , 2007la Croix and Michel, 2002;Bonneuil and Boarini, 2004;Echevarria and Iza, 2006;Albis, 2007). Recent demographic forecasts for the U.S. population show that the group of old (and mostly retired) people of age 65 and over will increase from 13.2% in 2010 to 20% in 2030(Population Projections, 1996.…”

“…To our knowledge, Aubin et al (2001) and Bonneuil and Boarini (2004) are the only economic papers where the control of a variable age of retirement is analyzed in overlapping-generations type models. These authors treat the issue of benefit over a satisfactory threshold rather than studying more common inter-temporal optimization and are methodologically close to the present paper.…”

Micro/macro viability analysis of individual‐based models: Investigation into the viability of a stylized agricultural cooperative

“…The mathematical viability theory has been developing for 30 years methods and tools to study the compatibility between dynamics and constraints . This framework has been applied to renewable resources management and especially to the regulation of fisheries , forest preservation , or lake eutrophication management as well as to broader(eco)‐system dynamics or to pure economic or social ones .…”

History, Differential Inclusions, and Narrative

“…40 For example, in a not yet published article by Jean-Pierre Aubin and others, 41 the viability of pay-as-you-go pension funds depends on the moving minimum allocation fixed at the political level to pensioners and workers. Different time scales are conveyed by mutational equations, as constraints K(t) may change more slowly than the state x(t) itself.…”