Automatic adjustment mechanisms in public pension reformsEffects over fiscal sustainability, adequacy, and fairness

  1. Diego Wachs 1
  2. Jorge Onrubia 2
  1. 1 London School of Economics and Political Science
    info

    London School of Economics and Political Science

    Londres, Reino Unido

    ROR https://ror.org/0090zs177

  2. 2 Instituto Complutense de Estudios Internacionales (ICEI-UCM)
Revista:
Documentos de trabajo ( FEDEA )

ISSN: 1696-7496

Año de publicación: 2021

Número: 5

Páginas: 1-25

Tipo: Documento de Trabajo

DIALNET GOOGLE SCHOLAR lock_openAcceso abierto editor

Otras publicaciones en: Documentos de trabajo ( FEDEA )

Resumen

In response to population ageing, many countries have adopted automatic adjustment mechanism reforms that link retirement to life expectancy. Despite their benefits, there is limited research about non-fiscal consequences of these mechanisms. In addition, there is uncertainty about the extent to which an increase in life expectancy signals a capacity of individuals to remain active in the workforce. In this paper, we used an overlapping generations model to analyse the effects of such reforms over fiscal sustainability, adequacy, and fairness of public pension systems. We looked at three scenarios defined by the mechanisms indexing retirement age: a constant pensions fiscal balance, constant life expectancy after retirement, and constant disability-free life expectancy after retirement. Growth is exogenous in our standard model; however, we explore an alternative model with endogenous productivity partially determined by the age structure of the population. We illustrate the dynamics of our model by applying it to Argentina’s public pension system. Our results show that linking retirement to life expectancy would not be enough to restrict the projected growth in the pension system’s deficit. We also find that changes in productivity have limited effect on pension indicators, although the indexation system can amplify or buffer such effects.

Referencias bibliográficas

  • Acemoglu, Daron, and Pascual Restrepo. 2017. “Secular Stagnation? The Effect of Aging on Economic Growth in the Age of Automation.” SSRN Electronic Journal 107 (5): 174–79. https://doi.org/10.2139/ssrn.2899142.
  • Acosta Ormaechea, Santiago, Diego Wachs, and Marco Espinosa-Vega. 2017. “Demographic Changes in Latin America: The Good, the Bad and ….” IMF Working Papers 17 (94): 1. https://doi.org/10.5089/9781475594775.001.
  • Alonso-García, Jennifer, María del Carmen Boado-Penas, and Pierre Devolder. 2018. “Adequacy, Fairness and Sustainability of Pay-as-You-Go-Pension-Systems: Defined Benefit versus Defined Contribution.” The European Journal of Finance 24 (13): 1100–1122. https://doi.org/10.1080/1351847X.2017.1399429.
  • Amaglobeli, David, and Wei Shi. 2016. How to Assess Fiscal Implications of Demographic Shifts: A Granular Approach. Washington, DC: International Monetary Fund.
  • Boersch-Supan, Axel, and Christina Wilke. 2004. “The German Public Pension System: How It Was, How It Will Be.” National Bureau of Economic Research. Cambridge, MA. https://doi.org/10.3386/w10525.
  • Bussolo, Maurizio, Johannes Koettl, and Emily Sinnott. 2015. Golden Aging. Prospects for Healthy, Active, and Prosperous Aging in Europe and Central Asia. Edited by World Bank Group. Washington, DC.
  • Crimmins, Eileen M, and Hiram Beltrán-Sánchez. 2010. “Mortality and Morbidity Trends: Is There Compression of Morbidity ?,” no. June: 75–86. https://doi.org/10.1093/geronb/gbq088.Advance.
  • De la Fuente, Ángel, Miguel Ángel García Díaz, and Alfonso R Sánchez. 2017. “La Salud Financiera Del Sistema Público de Pensiones Español. Análisis Retrospectivo, Proyecciones de Largo Plazo y Factores de Riesgo.” Estudios sobre la Economía Española 2017/04. http://documentos.fedea.net/pubs/eee/eee2017-04.pdf.
  • Eibich, Peter. 2015. “Understanding the Effect of Retirement on Health: Mechanisms and Heterogeneity.” Journal of Health Economics 43 (September): 1–12. https://doi.org/10.1016/j.jhealeco.2015.05.001.
  • Feichtinger, Gustav, Stefan Wrzaczek, Alexia Prskawetz, Michael Kuhn, and Gustav Feichtinger. 2012. “Optimal Choice of Health and Retirement in a Life-Cycle Model by Michael Kuhn Stefan Wrzaczek Alexia Prskawetz.”
  • Feyrer, James. 2007. “Demographics and Productivity.” Review of Economics and Statistics 89 (1): 100–109. https://doi.org/10.1162/rest.89.1.100.
  • Giglio, Stefano, Sumit Agarwal, John Campbell, Raj Chetty, John Cochrane, Xavier Gabaix, Bob Goldstein, et al. 2014. “Very Long-Run Discount Rates.” NBER Working Paper Series.
  • Guardiancich, Igor, and Mattia Guidi. 2020. “The Political Economy of Pension Reforms in Europe under Financial Stress.” Socio-Economic Review. https://doi.org/https://doi.org/10.1093/ser/mwaa012.
  • International Monetary Fund (IMF). 2011. “The Challenge of Public Pension Reform in Advanced and Emerging Economies.” Washington, DC.
  • International Monetary Fund (IMF). 2016. “Argentina: 2016 Article IV Consultation. Country Report No. 16/346.” http://www.imf.org/en/Publications/CR/Issues/2016/12/31/Argentina-2016-Article-IVConsultation- Press-Release-Staff-Report-and-Statement-by-the-44386.
  • International Monetary Fund (IMF). 2019. IMF Fiscal Monitor. Washington, DC.
  • Jagger, Carol, Clare Gillies, Francesco Moscone, Emmanuelle Cambois, Herman Van Oyen, Wilma Nusselder, and Jean-Marie Robine. 2008. “Inequalities in Healthy Life Years in the 25 Countries of the European Union in 2005: A Cross-National Meta-Regression Analysis.” The Lancet 372 (9656): 2124–31. https://doi.org/10.1016/S0140-6736(08)61594-9.
  • Maestas, Nicole, Kathleen J Mullen, and David Powell. 2016. “The Effect of Population Ageing on Ecocnomic Growth, The Labour Force and Productivity.” NBER Working Paper Series.
  • Marmot, M., and R. Bell. 2012. “Fair Society, Healthy Lives (Full Report).” Public Health 126 (SUPPL.1): S4–10. https://doi.org/10.1016/j.puhe.2012.05.014.
  • Nagarajan, Renuga, Aurora A C Teixeira, and Sandra T Silva. 2016. “The Impact of an Ageing Population on Economic Growth: An Exploratory Review of the Main Mechanisms.” FEP Working Papers.
  • National Research Council. 2013. Aging and the Macroeconomy: Long-Term Implications of an Older Population. National Academies Press. https://doi.org/10.17226/13465.
  • Nishimura, Yoshinori, Masato Oikawa, and Hiroyuki Motegi. 2018. What Explains the Difference in the Effect of Retirement on Health? Evidence From Global Aging Data. Journal of Economic Surveys. Vol. 32. https://doi.org/10.1111/joes.12215.
  • OECD. 2012. “OECD Pensions Outlook.” https://doi.org/9789264169401.
  • Prskawetz, Alexia, Bernhard Mahlberg, Vegard Skirbekk, Inga Freund, Maria Winkler-dworak, Thomas Lindh, Bo Malmberg, Ann-Christin Jans, Oskar Skans Nordström, and Fredrik Andersson. 2006. “The Impact of Population Ageing on Innovation and Productivity Growth in Europe.”
  • Queisser, Monika, and Edward R. Whitehouse. 2006. “Neutral or Fair?: Actuarial Concepts and Pension-System Design.” OECD Social, Employment and Migration Working Papers No. 40, 1– 43. https://doi.org/http://dx.doi.org/10.1787/351382456457.
  • Rohwedder, Susann, and Robert J Willis. 2010. “Mental Retirement.” Journal of Economic Perspectives 24 (1): 119–38. https://doi.org/10.1257/jep.24.1.119.
  • Sanderson, Warren, and Sergei Scherbov. 2013. “The Characteristics Approach to the Measurement of Population Aging.” Population and Development Review 39 (4): 673–85. https://doi.org/10.1111/j.1728-4457.2013.00633.x.
  • Sanderson, Warren, and Sergei Scherbov.. 2015. “Are We Overly Dependent on Conventional Dependency Ratios?” Population and Development Review 41 (4): 687–708. https://doi.org/10.1111/j.1728-4457.2015.00091.x.
  • Sharpe, Andrew. 2011. “Is Ageing a Drag on Productivity Growth? A Review Article on Ageing, Health and Productivity: The Economics of Increased Life Expectancy.” International Productivity Monitor 21: 82–94.
  • Souza, Laeticia R De, Bernardo L Queiroz, and Vegard F Skirbekk. 2019. “The Journal of the Economics of Ageing Trends in Health and Retirement in Latin America : Are Older Workers Healthy Enough to Extend Their Working Lives ?” 13 (April 2018): 72–83. https://doi.org/10.1016/j.jeoa.2018.03.008.
  • Tyrowicz, Joanna, Krzysztof Makarski, and Marcin Bielecki. 2018. “Inequality in an OLG Economy with Heterogeneous Cohorts and Pension Systems,” 583–606.
  • United Nations. 2017. World Population Ageing [Highlights]. https://doi.org/10.1007/s10916-012-9888-1.
  • Wachs, Diego, Andres Roman-Urrestarazu, Carol Brayne, and Jorge Onrubia-Fernandez. 2020. “Dependency Ratios in Healthy Ageing.” BMJ Global Health.
  • WHO. 2014. “WHO Methods for Life Expectancy and Healthy Life Expectancy.” Global Health Estimates Technical Paper, no. Marzo: 1–24. http://www.who.int/gho/mortality_burden_disease/en/index.html%5Cnhttp://www.who.int/gho.
  • World Health Organization. 2015. World Report on Ageing and Health. Geneva: World Health Organization. Published by Elsevier Ltd/Inc/BV. All rights reserved.
Fuente de los datos: Dialnet