%C Pavia, Italy
%D 2014
%L eprints2946
%A Xue Wen
%X We study the effects of ageing on the sustainability of the pension systems based on different funding and payment schemes: the PAYG and fully funded (FF) systems, the Beveridge (flat benefit) and Bismarck payment schemes (contribution related). We show that under different pensions systems, the sustainability of the pension system depends on different factors. In particular, given that the dominant pension system in most European countries is PAYG, we show that in the demographic trend of ageing, the commonly used policy actions such as raising tax rates distort labor supply and the capital market, thus, reduce the tax base and deteriorate the growth of the economy. Instead, structural pension reforms such as transforming PAYG systems to (partially) fully funded systems or alter the Beveridgean pension system to be more Bismarckian seem to be more efficient measures.
%T Endogenous Labor Supply, Economic Growth and Demographic Change in Pay-as-you-go and Fully-Funded Pension Systems