The Substitution Effect between Formal Fairness and Operational Efficiency——The Pension Reform which Based on Substantial
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| Title | The Substitution Effect between Formal Fairness and Operational Efficiency——The Pension Reform which Based on Substantial
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| Author | Zou Tieding and Ye Hang |
| Organization | College of Economics and Interdisciplinary Center for Social Sciences ,Zhejiang University |
| Email | zoutieding@163.com；yehang@china.com |
| Key Words | Pension; Fairness; Efficiency; Commission Account |
| Abstract | This paper employed a fair decision model to analyze the substitution effect and substantial fairness for pension system, for which has a guaranteed efficiency. Then we give a test to the China’s pension system about this problem with Chinese data. The results showed that:1)The growth rates of labor productivity play a key role in substitution effect, the substitution effect will be greater when we considering the growth rate of labor productivity than without; 2)Full-funded has the biggest substitution effect,the second is commission account, and the last is pay-as-you-go; 3)When the individual heterogeneity to labor productivity is very big, a differentiated tax policy will be good to substantial fairness from individual aspect; 4)when there is a serious aging problem, some kind of cuts in redistribution will be good to substantial fairness from system aspect;5)The test results indicated that, full-funded is a dominated strategy to pay-as-you-go in promoting substantial fairness from system and individual aspect, but a weakly dominated strategy to pay-as-you-go in reducing the increasing gap between rich and poor, so a radical transition from pay-as-you-go to full-funded is not a reasonable choice. |
| Serial Number | WP554 |
| Time | 2013-11-20 |
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