Pension system reform facing rapid aging: Lessons from China.

摘要

The economic and welfare impact of a pension reform have long been of critical concerns to academic economists and policy-makers. China's pension reform provides a good research case to study the effects of the type of pension reform from PAYG to partial funding. This dissertation presented in three essays aims to investigate the macroeconomic and welfare effects of China's pension reform, to review the progress and challenges facing China's pension system, and to study some reform options.;Essay one is the first of kind to use Auerbach--Kotlikoff framework to assess the economic effects of China's pension reform. We build a two-period OLG Simulation Model in a general equilibrium framework with homogeneous agent. Our analysis shows China's pension reform has notable and positive effects on the macro economy and intergenerational equality. Also the government can make appropriate policy measures to finance the transition costs. Finally, the economy reaches its new steady state five periods after the Reform, yet the future generations gain at the cost of the transition generation's welfare loss.;The second essay extends the two-period OLG General Equilibrium OLG Model with heterogeneous agents. Our analysis shows China's pension reform has significant and favorable effects on macro economy, individual welfare, and income inequality. Compared with the rich agent, the poor agent gains 70% higher from the Reform. The results also show partial funding is better than full funding for China's pension reform, which compliments the current literature.;The third essay makes two kinds of simulation analysis to evaluate the effects of possible parametric reform options. One is to apply Generational Accounting method and the other is to use an extended simulation model. The results show the fiscal burden facing future generations is much higher than the newborns in 2000. Raising retirement age and lowering pension benefits are more appropriate to improve intergenerational fiscal burden distribution. The results also show the low return of pension investment is the main reason for the low replacement ratio and diversifying pension investment is the most effective and viable one. Finally, possible pension reform alternatives are proposed.