abstract: 'We study the effects of pension reform on hours worked, human capital,

  income and welfare in an open economy populated by four overlapping

  generations: three active generations (the young, the middle aged and

  the older) and one generation of retired. Within each generation we

  distinguish individuals with high, medium or low ability to build human

  capital. Our simulation results prefer a pay-as-you-go pension system

  with a particular earnings-related linkage above a fully-funded private

  system. This pay-as-you-go system conditions pension benefits on past

  individual labor income, with a high weight on labor income earned when

  older and a low weight on labor income earned when young. Uncorrected,

  however, such a system implies welfare losses for current low-ability

  generations and rising inequality. Complementing or replacing it by

  basic and/or minimum pension components is negative for aggregate

  employment and welfare. Better is to maintain the tight link between

  individual labor income and the pension also for low-ability

  individuals, but to strongly raise their replacement rate. An additional

  correction improving the welfare of low-ability individuals would be to

  maintain for these individuals equal weights on past labor income.'
affiliation: 'Buyse, T (Corresponding Author), Univ Ghent, SHERPPA, B-9000 Ghent,
  Belgium.

  Buyse, Tim; Heylen, Freddy; Van de Kerckhove, Renaat, Univ Ghent, SHERPPA, B-9000
  Ghent, Belgium.

  Res Fdn Flanders FWO, Brussels, Belgium.'
author: Buyse, Tim and Heylen, Freddy and Van de Kerckhove, Renaat
author-email: 'Tim.Buyse@UGent.Be

  Freddy.Heylen@UGent.Be'
author_list:
- family: Buyse
  given: Tim
- family: Heylen
  given: Freddy
- family: Van de Kerckhove
  given: Renaat
da: '2023-09-28'
doi: 10.1017/S1474747215000281
eissn: 1475-3022
files: []
issn: 1474-7472
journal: JOURNAL OF PENSION ECONOMICS \& FINANCE
keywords: 'Employment by age; retirement; pension reform; heterogeneous abilities;

  overlapping generations'
keywords-plus: SOCIAL-SECURITY; GROWTH; INEQUALITY; POLICY; DECISIONS
language: English
month: APR
number: '2'
number-of-cited-references: '41'
orcid-numbers: Buyse, Tim/0000-0002-4769-5888
pages: 144-172
papis_id: 5a32f099f6cc0010a56164bfedb0a6a3
ref: Buyse2017pensionreform
times-cited: '9'
title: Pension reform in an OLG model with heterogeneous abilities
type: Article
unique-id: WOS:000396831900002
usage-count-last-180-days: '5'
usage-count-since-2013: '58'
volume: '16'
web-of-science-categories: Business, Finance; Economics
year: '2017'