Wang, YanXu, DianqingWang, ZhiZhai, Fan2014-08-262014-08-262001-02https://hdl.handle.net/10986/19708The main problems with China's pension system--the pension burdens of state enterprises and the agency of the population--have deepened in recent years. Using a new computable general equilibrium model that differentiates between three types of enterprise ownership and 22 groups in the labor force, the authors estimate the effects of pension reform in China, comparing various options for financing the transition cost. They examine the impact that various reform options would have on the system's sustainability, on overall economic growth, and on income distribution. The results are promising. The current pay-as-you-go system, with a notional individual account, remains unchanged in the first scenario examined. Simulations show this system to be unsustainable. Expanding coverage under this system would improve financial viability in the short run but weaken it in the long run. Other scenarios assume that the transition cost will be financed by various taxes and that a new, fully funded individual account will be established in 2001. The authors compare the impact of a corporate tax, a value-added tax, a personal income tax, and a consumption tax. They estimate the annual transition cost to be about 0.6 percent of Gross Domestic Product (GDP) between 2000 and 2010, declining to 0.3 percent by 2050. Using a personal income tax to finance the transition cost would best promote economic growth and reduce income inequality. Levying a social security tax and injecting fiscal resources to finance the transition costs would help make the reformed public pillar sustainable. To finance a benefit of 20 percent of the average wage, a contribution rate of only 10 percent-12.5 percent would be enough to balance the basic pension pillar. Gradually increasing the retirement age would further reduce the contribution rate.en-USCC BY 3.0 IGOACCOUNTING SYSTEMADMINISTRATIVE COSTSADMINISTRATIVE SYSTEMALLOCATION OF RESOURCESAUTHORITYBASIC BENEFITBASIC PENSIONBENEFIT LEVELBUDGET SURPLUSCENTRAL GOVERNMENTCENTRAL GOVERNMENTSCOMPETITIVE BIDDINGCONTRIBUTION RATECONTRIBUTION RATESDEBTDECREEDECREESDEFICITSDEFINED BENEFITSDEFINED CONTRIBUTION PROVIDENT FUNDSDEFINED CONTRIBUTION SYSTEMSDEPENDENCY RATIODEPOSIT INSURANCEDEPOSIT INSURANCE SCHEMESDISCOUNT RATESECONOMIC GROWTHECONOMIC REFORMECONOMISTSEMPIRICAL EVIDENCEEMPLOYMENTENTERPRISE OWNERSHIPENTERPRISE REFORMEQUILIBRIUMEXPENDITURESFACE VALUEFINANCIAL SECTORSFINANCIAL SUSTAINABILITYFINANCIAL VIABILITYFISCALFISCAL EXPENDITUREFISCAL POLICIESFISCAL RESOURCESFISCAL STABILITYFISCAL SUSTAINABILITYFOREIGN DEBTFUTURE PENSIONSGENERAL EQUILIBRIUM MODELGOVERNMENT DEBTGOVERNMENT POLICYIMPORTSINCENTIVE PROBLEMSINCOMEINCOME DISTRIBUTIONINCOME INEQUALITYINDEXATIONINDIVIDUAL ACCOUNTSINFORMAL ECONOMYINFORMAL EMPLOYMENTINFORMAL SECTORINTERGENERATIONAL EQUITYINVENTORIESINVENTORYLABOR FORCELABOR INPUTSLABOR MARKETLABOR SUPPLYLIFE EXPECTANCYLOCAL GOVERNMENTLOCAL GOVERNMENT FINANCELOCAL GOVERNMENTSLOCAL TAXMARKET DISTORTIONSMARKET PRICESMINISTRY OF FINANCEMULTIPILLAR SYSTEMSMUNICIPALITIESMUNICIPALITYPAYROLL TAXPAYROLL TAXESPENSION COVERAGEPENSION DEBTPENSION FUNDPENSION FUNDSPENSION INSURANCEPENSION LIABILITIESPENSION REFORMPENSION REFORMSPENSION RIGHTSPENSION SERVICESPENSION SYSTEMPENSION SYSTEM REFORMPENSION SYSTEMSPENSIONERSPENSIONSPERSONAL SAVINGSPOLICY INSTRUMENTSPOPULATION DYNAMICSPOPULATION GROWTHPOVERTY LINEPREFECTURE GOVERNMENTSPRESENT VALUEPRIVATIZATIONPRODUCTIVITYPUBLIC ENTERPRISESPUBLIC EXPENDITUREPUBLIC EXPENDITURESPUBLIC PILLARPUBLIC POLICIESPUBLIC POLICYPUBLIC RESOURCESPUBLIC SECTORREPLACEMENT RATEREPLACEMENT RATESRESOURCE ALLOCATIONRETIREESRETIREMENTRETIREMENT AGEREVENUE SOURCESSAVINGSSOCIAL INSURANCESOCIAL INSURANCE CONTRIBUTIONSSOCIAL INSURANCE FUNDSSOCIAL SECURITYSOCIAL SECURITY BENEFITSSOCIAL SECURITY REFORMSOCIAL SECURITY TAXESSTATE ASSETSSTATE BANKSSTATE ENTERPRISESTATE ENTERPRISESSTATE PLANNINGSTATE SECTORSTATE-OWNED ENTERPRISESTAX RATESTAX REVENUETAXATIONTRADE POLICIESUNEMPLOYMENTWAGESWELFARE EFFECTShttps://doi.org/10.1596/1813-9450-2555