Pension Reform: How Macroeconomics May Help Microeconomics - the Czech Case

Ondrej Schneider
2005 Social Science Research Network  
In this paper, we combine macro and microeconomic approaches to a pension reform. First, we modify an OLG model and estimate macroeconomic effects of a pension systém switch from a pure PAYG to a mixed system. Second, we employ macroeconomic results in a microeconomic simulation in which we estimate individual welfare gains for various income groups in each cohort affected by the pension reform. We propose an unorthodox sequencing of the pension reform in which the pre-retirement generations
more » ... ment generations would enter the reformed system first. This sequencing maintains the Pareto efficiency condition for all age cohorts, but it gives governments more flexibility in the reform process. JEL Classification: C68, E17, H55
doi:10.2139/ssrn.570104 fatcat:rmoekenxcra5nkrmp7o5r4tldq