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The Effect on Pension Reform on Economic Dynamic Efficiency
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TitleThe Effect on Pension Reform on Economic Dynamic Efficiency  
AuthorYang Jijun and Zhang Erzhen  
OrganizationSchool of International Economics and Trade, Nanjing University Of Finance And Economics;School of Economics, Nanjing University; 
Key WordsPay-as- you-go Scheme; Partial Funded Scheme; Pension Substitution Rate; Dynamic Efficiency 
AbstractDynamic efficiency is the core of capital accumulation and economic growth.The paper collects 30 provincial data of china on 1997-2014 and uses the SYS-GMM method to examine the impact of pension reform on dynamic efficiency. The results show the transition from pay-as- you-go scheme to funded scheme has a significant crowded in effect on savings, which contributes to the foundation of excessive accumulation of capital and exacerbates the dynamic invalid of Chinese economy. In the meanwhile, this impact tends to becomes stronger in the center of the distribution but weaker near the upper end and the lower end. Since the national co-ordinate of basic pension not be implemented and transfer of the flowing worker pension insurance relationship is hampered, the regression results are quite different in different regions. The interaction coefficient is -0.027 between pension replacement rate and FDI, indicating that the international mobility of elements plays a buffer role on deterioration of the economic dynamic efficiency, China implement pension reform under the background of capital account liberalization is superior to the closed state. Thus, this paper argues that we can’t copy the experience of mature economies to make the transition to a fully funded system eagerly. On one hand, we can consider NDC as transitional institutional arrangement in the long-term reform of pensions. On the other hand, we can implement the national co-ordination of basic pension; abolish the institutional obstacles which hinder domestic integration of pension; open capital markets gradually; improve the efficiency of capital allocation in the larger context. 
Serial NumberWP1217 
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