Aging, social security design and capital accumulation

This paper analyzes the impact of aging on capital accumulation and welfare in a country with a sizable unfunded social security system. Using a two-period overlapping-generation model with endogenous retirement decisions, we show that both the type of aging and the type of unfunded social security system are important in understanding this impact. We consider two demographic changes, declining fertility and increasing longevity, and three types of pensions, defined contributions, defined benefits and defined annuities, to investigate the differences in implications of aging