Abstract: While PAYGO plays an important role in reducing poverty, narrowing the wealth gap and promoting social fairness, it faces great challenge under the background of aging. The paper analyzes the redistribution effect of China’s pension system by comparing with the practices in OECD countries, especially the OASI of the United States. The paper also explores the effects of the contribution rate and the institutional return rate on labor supply in a PAYGO pension system. An improvement of the current pension system of China is proposed.
Keywords: PAYGO, Redistribution Effect, Distortion to Labor Supply
source:Finance & Trade Economics ,No5,2014