Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279237 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10487
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Using an overlapping generations model, two new indicators of public pension system sustainability are proposed: the pension space, which measures the capacity to pay for pension expenditures out of labour taxation, and the pension space exhaustion probability reflecting demographic uncertainties. These measures reveal that the pension spaces of advanced economies are strikingly different. Most nations have little scope to further finance pensions out of labour income taxation over the next thirty years. There is no one-size-fits-all solution. Risk-equivalent pension reforms enhance welfare in the long run, particularly for rapidly ageing nations, but also entail non-negligible transitional costs.
Subjects: 
ageing
fiscal space
public pension sustainability
overlapping generations model
JEL: 
E62
H55
H20
Document Type: 
Working Paper
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