We analyze intergenerational redistribution in emerging economies with the aid of an overlapping generations model with endogenous labor supply. Growth is initially high but declines over time. A version of the model calibrated to China is used to analyze the welfare effects of alternative pension reforms. Although a reform of the current system is necessary to achieve financial sustainability, delaying its implementation implies large welfare gains for the (poorer) current generations, imposing only small costs on (richer) future generations. In contrast, a fully funded reform harms current generations, with small gains to future generations. (JEL E13, H55, J11, O11, O15, P24, P36)
Song, Zheng, Kjetil Storesletten, Yikai Wang, and Fabrizio Zilibotti.
"Sharing High Growth across Generations: Pensions and Demographic Transition in China."
American Economic Journal: Macroeconomics,
General Aggregative Models: Neoclassical
Social Security and Public Pensions
Demographic Trends, Macroeconomic Effects, and Forecasts
Macroeconomic Analyses of Economic Development
Economic Development: Human Resources; Human Development; Income Distribution; Migration
Socialist Systems and Transitional Economies: National Income, Product, and Expenditure; Money; Inflation
Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty