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The Welfare Effect of Dual-Track Pension System Unification
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TitleThe Welfare Effect of Dual-Track Pension System Unification  
AuthorZheng Chunrong and Ning Lei  
OrganizationShanghai University of Finance and Economics; 
Key WordsDual-Track Pension System; Social Welfare; Life Cycle Model 
AbstractWe build a dynamic general equilibrium life-cycle model; calibrate the model parameters using China data and use counter-factual experiments to study the welfare effect of the reform of Chinese dual-track pension system. We find that the end of China’s dual-track pension system reduce the welfare gap between public servants and urban workers: the welfare of low-skill public servants is only 2.24% higher than low-skill urban worker not 40.5% higher before; the welfare of high-skill public servants is only -0.7% higher than high-skill urban worker not 34.8% higher before. If public servants paid pension tax or received pension insurance as urban workers separately, the welfare gap between public servants and urban workers could be narrowed down significantly, especially under the former way. If there were no the dual-track pension system, it would be slightly unfair to high-skill civil servants but would not be unfair to low-skill civil servants. 
Serial Numberwp1294 
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