Proceedings of the 2014 International Conference on Management Science and Management Innovation

Can Pay-as-you-go System Trigger Payment Crisis in China

Authors
Han Sun, Ning Ning, Wu-Jun Sun
Corresponding Author
Han Sun
Available Online June 2014.
DOI
https://doi.org/10.2991/msmi-14.2014.84How to use a DOI?
Keywords
Population aging, Endogenous growth, PAYG, Pension tax rate, Savings rate.
Abstract
China has implemented the part funded system of pension project management, but the personal part of pension account has been empty running since the reform, 1997. The problem cannot be solved in short term, and the old-age pension system still be supported by the pay-as-you-go (PAYG in short) system account. So the research of PAYG system is significant. Different from these former papers, this paper takes the perspective of the entire economies, constructs an endogenous growth model, tries to find the path of how population aging affects the pension tax rate and discusses whether the PAYG system can result in a payment crisis. Conclusions show that in a short time, the multiple of unit worker’s output is a single factor to determine the pension tax rate, so the PAYG system would not have a payment crisis in short term; in a long time, population aging affects pension tax rate under the influence of savings rate. The aggravation of population aging causes a decline in savings rate, and then the pension tax rate increases. There is a positive correlation between the pension tax rate and the estate transfer rate, education investment rate. And also, the pension tax rate has an inhibitory effect on the decreasing of savings rate. In that way, the rising extent of pension tax rate would be reduced. Pension tax rate has the function of automatic stabilizers and long-term aging of the population does not necessarily lead to the occurrence of PAYG system payments crisis.
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Proceedings
2014 International Conference on Management Science and Management Innovation (MSMI 2014)
Part of series
Advances in Economics, Business and Management Research
Publication Date
June 2014
ISBN
978-94-6252-015-8
ISSN
2352-5428
DOI
https://doi.org/10.2991/msmi-14.2014.84How to use a DOI?
Open Access
This is an open access article distributed under the CC BY-NC license.

Cite this article

TY  - CONF
AU  - Han Sun
AU  - Ning Ning
AU  - Wu-Jun Sun
PY  - 2014/06
DA  - 2014/06
TI  - Can Pay-as-you-go System Trigger Payment Crisis in China
BT  - 2014 International Conference on Management Science and Management Innovation (MSMI 2014)
PB  - Atlantis Press
SP  - 467
EP  - 478
SN  - 2352-5428
UR  - https://doi.org/10.2991/msmi-14.2014.84
DO  - https://doi.org/10.2991/msmi-14.2014.84
ID  - Sun2014/06
ER  -